Profit margin and gross margin are not the same thing.

Question

Quizplus · Accepted Answer

Profit margin and gross margin are two different financial ratios used to analyze a company's profitability. Gross margin refers to the percentage of revenue that remains after deducting the cost of goods sold. Profit margin, on the other hand, takes into account all expenses, including operating expenses, taxes, and interest payments, in addition to the cost of goods sold. Therefore, gross margin is always higher than profit margin, and they cannot be used interchangeably.

Profit Margin and Gross Margin Are Not the Same Thing