Gross Profit Margin

Gross profit margin is a financial ratio that indicates the profitability of a company's core operations. It is calculated by dividing the gross profit (revenue minus the cost of goods sold) by the revenue and expressing the result as a percentage. The gross profit margin reveals the portion of each dollar of revenue that remains after accounting for the direct costs associated with producing or delivering a product or service. It represents the profitability before considering other expenses such as operating expenses, taxes, and interest.

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