Gross Margin - Analysis on income statement

Описание: Gross Margin also known as “gross profit” measures operations profitability.
Learn how to interpret Gross Margin on income statement.
It shows how much profit a company makes after paying off its Cost of Goods Sold (COGS).
How to calculate gross margin?
For every dollar generated while doing business, there is a part consumed for paying back cost.
What is left is the gross margin.
There are more expenses that are not considered because are not directly related into to the cost of production

It is “gross margin” because we have not taken out all the other expenses while doing business, like our phone or electricity bill, administrative, marketing expenses.

Gross margin income statement Interpretation:
-Higher margins are more desirable.
-If Gross Margin is higher More capital can be used to pay expenses (While doing business) and increase business value if capital is used/invested correctly.

What Variables impact on Gross Margin?
Pricing strategy, suppliers, labor costs, innovation, supply chain management.

Gross Margin is related to Cost of goods sold an inventory:

It is what it costs you to produce the things you are selling, based on your sales/Revenue (the money brought in by selling products or services)
Costs are directly related to producing your products or services, and it includes labor costs.
within a period of time

“profits are found in purchasing decisions”

#tiefinance #grossmargin #accounting

0:00 introduction to Gross margin
1:23 What is Gross Margin
2:31 What is cost of goods sold
3:11 Gross Margin definition
3:34 Why inventory is key to understand gross margin
4:16 Gross Margin Analysis
5:32 What variables impact gross margin
6:27 more financial analysis

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