Definition of Gross Margin Ratio

Definition of Gross Margin Ratio

Definition: What is Gross Margin Ratio?

Gross Margin Ratio is the profitability ratio which compares the gross margin of the business to the net sales. GM ratio shows that a business is how profitable sale its inventory or merchandise.

Definition of Gross Margin Ratio

With the profit margin ratio, this ratio is confused but both the ratios are totally different from each other.

Gross margin ratio only considers the (COGS) cost of goods sold because it measures the profitability of the selling inventory. Whereas the profit margin ratio used to measure the other expenses.

Financial Ratio is a forum where you will learn about all ratios definitions and formulas.

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