Gross margin

The share of each sales dollar left after paying the direct cost of making the product or service. A 60% gross margin means $60 of every $100 in sales is left to cover other costs and profit.

A falling gross margin usually means costs are rising faster than prices, or the company is cutting prices to win business.

Also called: gross margins, gross profit margin.

Related terms

  • Operating cash flow: The cash a company's normal business actually brings in during a period, after paying its everyday bills.
  • Earnings per share: A company's profit divided by its number of shares. It's the most common way to measure profit, and the number Wall Street compares with its forecasts each quarter.

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