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Gross margin is the percentage of revenue a company keeps after direct expenses associated with producing its goods/services.
Direct expenses include all material, machines, labor, … used to produce sold products/services. A company that earns 100M USD and spends 50M USD on employees and 25M on other direct costs has a gross margin of 25%.
Related Links
Investopedia article on gross margin
BDC article on gross margin
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