Gross profit margin (sometimes called the gross margin) is the gross profit (i.e. sales minus direct costs, a.k.a. cost of goods sold) divided by sales. This is the profit available to cover general, sales and administrative expenses, depreciation, amortization, interest and taxes. Unlike net profit margin, it doesn’t include operating expenses, depreciation, amortization, interest, non-operating income and expenses, or income taxes.
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