Gross Margin

Gross Margin is the percentage of revenue a company keeps after paying for the direct costs of making its products. Think of it as what's left over before the company pays for things like salaries, rent, or marketing. You'll see this number on earnings reports and financial websites—it's one of the quickest ways to judge how efficiently a company operates. A higher gross margin usually means the company has more breathing room to cover other expenses and turn a profit. For example, if a clothing maker sells $100 worth of shirts but spent $40 on fabric and labor, that's a 60% gross margin. It's a useful metric for comparing companies in the same industry.