Gross Profit Margin

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The formula for Gross Profit Margin is Gross Profit divided by Revenue (Gross Profit / Revenue). As this is a financial metric concerning profits, the bigger the value the better it is. Larger margins shows the company is healthy. As the largest expense for a business is Cost Of Goods Sold (COGS), a lower Gross Profit Margin means that the money available for overhead-related expenses is under pressure.

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