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If gross margin is 100%, is it possible for net margin to be lower:

If you keep 100% of the revenue you make, how can you receive less percent of every dollar. Shouldn't gross and net both be 100%

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1 Answer

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Gross Margin = (Gross Profit/Sales)*100

Gross Profit = Revenue - Cost of Sales

Net Profit = Revenue - Expenses

Or in words, the Gross Margin is an expression of the Gross Profit as a percentage of Sales, where the Gross Profit is Sales minus the Cost of Sales. The Net Profit, on the other hand, is Revenue minus ALL Expenses (including cost of sales).

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user983248, Rohit did not ask you explain what Gross Margin and Net Profit are, he asked could one be lower than the other. [note - additional text edited/deleted by moderator] – Rohit Jun 5 '12 at 23:57
@Rohit If he makes the numbers... he will find the answer ;) – user983248 Jun 6 '12 at 15:56

protected by Zuly Gonzalez♦ Jun 6 '12 at 3:56

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