Equity / Profitability Metric

Gross Profit Margin

Definition

A profitability ratio measuring the percentage of revenue remaining after subtracting the cost of goods sold. It indicates how efficiently a company produces its goods relative to revenue.

Formula / Rules
(Revenue - Cost of Goods Sold) / Revenue × 100
Example
Revenue of $1,000,000 minus $600,000 COGS equals 40% gross profit margin.
Related Terms
Net Profit Margin Operating Margin Return on Equity (ROE)
Frequently Asked Question
What is Gross Profit Margin?
Gross Profit Margin is a profitability ratio measuring the percentage of revenue remaining after subtracting the cost of goods sold. A higher margin indicates more efficient production relative to revenue.
APA Citation
Clark, R. (2025). Gross Profit Margin. VixShield Trading Glossary. Retrieved from https://www.vixshield.com/glossary/gross-profit-margin
RC
Russell Clark, FNP-C
Author of SPX Mastery series · Founder of VixShield
Last updated:  ·  Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.