3. Gross Profit Margin
Represents the percentage of revenue left after subtracting the cost of goods sold (COGS). This metric focuses on the core profitability of a company’s products or services before accounting for other operational expenses, helping assess pricing strategies and production efficiency.
Example: A company’s revenue is $300,000, and the cost of goods sold (COGS) is $180,000. The gross profit margin is ((($300,000 - $180,000) / $300,000) × 100) = 40%.
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