Gross Margin

Gross Margin is the percentage of revenue a company keeps after paying for the direct costs of making its products. Think of it as the profit left over before accounting for operating expenses like salaries and marketing. You'll see this metric in earnings reports and financial statements because it reveals how efficiently a company produces goods—higher margins generally mean better pricing power or lower production costs. For example, if a clothing maker sells $100 worth of shirts but spends $40 on fabric and labor, that's a 60% gross margin. It's a quick way to compare how profitable different companies are at their core business, before overhead gets involved.