Original subtitles

A gross margin is your revenue in sales minus cost of goods sold over your sales revenue.

Or, in other words, it's your gross profit over your sales revenue.

This is how you get it.

You take your gross profit and divide it

by the total revenue and if you want the same value in percentage,

you just multiply that by a 100.

We have a relatively high gross margin.

You can see, even as you eyeball the sales revenue compared to the cost of goods sold,

this gross margin tells if you got executives.

The 46% of the sales revenue or 46 cents over

each sales revenue dollar is available to cover operating expenses.

If the cost of goods increases,

or the revenue declines and the margin begins to decline over time,

the company has less money to cover those expenses.

So, how do you know if this is a good gross margin?

A good gauge is to look at industry standards or financial statements,

or reports shared by other top competitors and

see whether your gross margin falls below or above the industry standard.

It can tell you a lot about how you're doing in

terms of sales or pricing of your product,

expenses, and if you need to lower your expenses.