Gross Profit Margin and Net Profit Margin 2026 Guide
Gross Profit Margin and Net Profit Margin: 2026 Guide Gross profit margin evaluates profitability after direct production costs (COGS), with an emphasis on production efficiency, whereas net profit margin measures the final percentage of revenue retained after all expenses, including taxes and interest. Gross margin is always greater, representing core product profitability, whereas net margin represents the entire firm's profitability. What is Gross Profit Margin? Gross profit margin is a financial ratio that shows how much profit a business earns after deducting the cost of goods sold (COGS) . It reflects the efficiency of the production and pricing strategy. In simple terms, it tells you how much money is left after covering the direct costs of producing goods or services. For example, if your business earns ₹100,000 in revenue and spends ₹60,000 on production, your gross profit is ₹40,000. Gross profit margin helps you understand whether your busines...