Gross Profit Margin

Gross Profit Margin expresses gross profit as a percentage of total revenue, indicating how much money a company retains from each unit of revenue after covering production costs.

Gross Profit Margin Formula: (Gross Profit / Revenue) × 100

Investors use this metric to assess business health, scalability, and competitive positioning. High gross profit margins are a hallmark of SaaS, fintech, and consulting businesses, whereas industries like retail and hospitality typically operate on thinner margins due to higher COGS.