Gross profit
Revenue minus the direct cost of delivering those sales.
Worked example · a round-number company
Revenue$5.0B−Cost of revenue$1.5B=Gross profit$3.5BGross profit$3.5B÷Revenue$5.0B=Gross margin70.0%How to read it
↑Higher is better. Indicates how much remains before overhead and other expenses.
Keep in mind
- Not an appropriate universal measure for banks; a missing cost line is never treated as zero.