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Gross margin (definition)

The gross margin is what remains after you divide your gross profit by your net sales (your gross sales minus sold items later returned by customers). The gross margin is a measure of how the selling price of your product compares to its cost.

Gross margin = gross profit / net sales


Plant, Albert C. (2007). The retail game: playing to win: a guide to the profitable sale of goods and services. Vancouver: Douglas & McIntyre Ltd.

Pratt, Jamie. (2003). Financial Accounting in an Economic Context. New York: John Wiley& Sons; 2003.