Gross margin
Out of every 100 you sell, how much is left after paying for what you sold. That pays for everything else: staff, rent, interest…
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How it is calculated
The formula
(Sales − Cost of sales) ÷ Sales
An example
| Sales for the current period | 250,000 € |
| Cost of sales for the current period | 170,000 € |
(€250,000 − €170,000) ÷ €250,000 = 32.0%
Gross margin (previous period)
The same gross margin, calculated with the figures of the previous period.
The formula
(Sales − Cost of sales) ÷ Sales, using the figures of the previous period
It is useful for comparing: put it next to the gross margin of the current period, or use “Change in gross margin”, and you will see whether your margin is improving or worsening.
An example
| Sales for the previous period | 240,000 € |
| Cost of sales for the previous period | 165,000 € |
(€240,000 − €165,000) ÷ €240,000 = 31.3%
Change in gross margin
How many points your gross margin has gained or lost. It is measured in percentage points (p.p.): going from 32 % to 26 % is losing 6 p.p.
The formula
Gross margin of the current period − Gross margin of the previous period
An example
| Sales for the current period | 250,000 € |
| Cost of sales for the current period | 170,000 € |
| Sales for the previous period | 240,000 € |
| Cost of sales for the previous period | 165,000 € |
32.00% − 31.25% = 0.8 p.p.
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Informational support tool; it does not constitute financial, accounting or tax advice.