(119) The company’s gross profit margin was negatively impacted by rising production costs. A good gross profit margin typically ranges from 20% to 40%, varying by industry. Comparing within the same industry provides a more accurate assessment of what constitutes a healthy margin. Focusing solely on one type of margin can lead to a skewed understanding of a business’s financial health.

• Ignoring these irregularities could paint an artificially positive picture, meaning you overlook issues with your approach.
• In the last fiscal year, Dani’s Apparel reported $500,000 in revenue from clothing sales and $200,000 from accessories, totaling $700,000 in net sales.
• Gross profit measures a business’s profit after deducting COGS, whereas operating profit measures a business’s profit after deducting all operating expenses.
• It serves as a comprehensive measure of a company’s profitability, considering factors such as depreciation, overhead costs, and rent.

Gross vs Net Profit Margin: Quick Guide

(84) The ratio analysis revealed that the company’s gross profit margin had declined. (61) The company’s gross profit margin declined due to a decrease in sales volume. (52) Horizontal analysis revealed a decline in the company’s gross profit margin. (51) The company’s gross profit margin has increased significantly this quarter.

More Gross Sentence Examples

(116) The company’s gross profit was impacted by a decrease in the price of raw materials. (106) The gross profit of the restaurant was higher than expected due to increased sales. (101) The company’s gross profit margin has been steadily increasing over the past year. (94) The company’s gross profit was higher than expected due to cost-cutting measures.

Browse other sentences examples

Therefore, while high net margins are generally positive, they require a balanced approach to ensure long-term sustainability and brand equity. Profit margins can vary widely across industries due to differing cost structures and revenue models. For instance, retail typically exhibits lower net profit margins, often around 5-10%, due to high operating costs. Conversely, industries like software or pharmaceuticals might show higher margins, often exceeding 20%, due to lower COGS and high demand for innovation. (76) The profit-and-loss statement indicated a rise in gross profit margin due to cost-saving measures.

Financial reporting

(63) The gross margin is calculated by subtracting the cost of goods sold from the revenue. Gross profit can also be misleading when analyzing the profitability of service sector companies. A law office with no cost of goods sold will show a gross profit equal to its revenue.

Popular in Grammar & Usage

Since gross profit only encompasses profit as a percentage of sales revenue, it’s the perfect factor when comparing companies. For example, analyzing gross profit can help identify areas for cost control, such as negotiating better deals with suppliers or optimizing production processes. Gross profit represents the earnings after direct production costs are subtracted from revenue, focusing solely on core business operations. Net income Online Accounting includes all expenses–such as operating expenses, taxes, interest, and other non-operational costs–giving a complete picture of a company’s overall profitability.

• (205) The CFO reported that gross profit had increased by 10%, and the company’s board of directors applauded the news.
• (69) A low gross profit margin may indicate that a company is struggling to generate revenue.
• (18) The company’s gross profit margin is a reflection of its pricing strategy.
• Improving gross profit margin involves focusing on reducing the cost of goods sold (COGS) and enhancing pricing strategies.
• (124) The gross profit margin can be influenced by changes in pricing or cost of goods sold.

(180) The CEO announced that gross profit had reached an all-time high, and shareholders were pleased. (55) The CFO analyzed the company’s gross profit trends over the past five years. The revenue figure should be net of any discounts, returns, or allowances to reflect the actual sales amount. Ignoring these irregularities could paint an artificially positive picture, meaning you overlook issues with gross profit your approach. For example, if your sales are above expectations but you fail to account for a 20% return rate, you’ll be less likely to look into why so many customers are dissatisfied.

(79) The company’s gross profit margin is expected to be impacted by changes in market conditions. (41) The company’s gross profit margin is lower than expected due to increased costs. (228) While the gross profit had increased year-over-year, the company’s net income had actually decreased due to rising operating expenses. (192) The gross profit margin is a measure of a company’s profitability before deducting operating expenses. (189) The company’s gross profit margin is expected to improve next quarter due to cost-saving initiatives. (169) The gross profit margin can be calculated by subtracting the cost of goods sold from revenue.

Implementing a tiered pricing model or promoting higher-margin products are effective tactics. Use it with other legal and financial terms The phrase “in gross” can be used in conjunction with other legal and financial terms to provide more clarity and specificity.. (81) Despite a decrease in gross revenue, the company’s net income increased due to a reduction in expenses.