Gross Profit - What is the difference between gross margin and gross profit?

Q: What is the difference between gross margin and gross profit?

Gross margin is the difference between revenue and cost of goods sold (COGS), divided by revenue. ... `Gross margin` is often used interchangeably with `gross profit`, however the terms are different: `gross profit` is technically an absolute monetary amount and `gross margin` is technically a percentage or ratio.

Answer

A company's gross margin may be calculated by dividing its revenue by its cost of goods sold (COGS). Despite their frequent interchangeability, "gross margin" and "gross profit" really mean distinct things. "Gross profit" refers to a fixed dollar figure, whereas "gross margin" denotes a percentage or ratio.

Gross Profit - What is the difference between gross margin and gross profit?

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