Gross Margin Percentage
Gross Margin Percentage is a profitability metric that shows the percentage of revenue that remains after you subtract the Cost of Goods Sold (COGS). This value indicates how efficiently your company produces and delivers its goods or services.
NetSuite calculates the Gross Margin Percentage using the following formula:
|
Gross Margin % |
= |
100% - COGS as a % of Revenue |
If COGS as a percentage of revenue is unavailable or invalid, the gross margin will be displayed as '-'.
For example, Company A has $20,000,000 revenue for a year and COGS for the year is $12,500,000. First, calculate COGS as a percentage of revenue:
|
COGS as a Percentage of Revenue |
= |
($12,500,000 / $20,000,000) * 100 |
|
|
= |
0.625 * 100 |
|
|
= |
62.5% |
Then, use this value to calculate Gross Margin Percentage:
|
Gross Margin % |
= |
100 - COGS as a % of Revenue |
|
|
= |
100 – 62.5 |
|
|
= |
27.5% |
Related Topics
- Benchmark 360 Key Performance Indicators
- Days Cash on Hand Calculation
- Days Sales Outstanding Calculation
- Days Payable Outstanding Calculation
- Employee Turnover Rate Calculation
- COGS as a Percentage of Revenue
- Average Revenue Per Customer
- Average Revenue Per Sales Order
- Inventory Turns (Finished Goods)