Company Health

What is Gross Margin?

Revenue left after subtracting the direct cost of making the product

Full Explanation

Gross margin = (revenue − cost of goods sold) ÷ revenue. It shows how profitable the product itself is before operating costs.

Sell a widget for $100, costs $40 to make → 60% gross margin.

Pro Tip

Software companies often have 70–80% gross margins. Physical goods are much lower.

Balance Sheet

A snapshot of everything a company owns and owes

Profit Margin

What percentage of revenue becomes actual profit

P/E Ratio

How expensive a stock is compared to its profits

Free Cash Flow

Actual cash left after all expenses

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