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Revenue less the direct cost of sales, usually expressed as a share of revenue.
The income statement deducts cost of sales from revenue. Dividing the result by revenue gives the margin. Selling prices, product mix and input costs can change it. Classification also matters: moving an expense between cost of sales and operating expenses can change reported gross margin without changing total profit. Comparing different businesses therefore requires checking what each includes in cost of sales.
In a hypothetical month, a shop records J$10 million of sales and J$7 million of cost of sales. Gross profit is J$3 million and gross margin is 30%. If rent, administration, interest and other expenses total J$2.5 million, only J$500,000 remains before any further applicable deductions. The 30% figure does not mean the owner keeps 30 cents of every dollar as net profit.
FosRich seeks time from bondholders as restructuring talks continue