Gross profit margin
Okay kiddo, let me explain to you what gross profit margin is. Imagine you have a lemonade stand where you sell lemonade to your friends.
Let's say, you bought all the lemons, sugar, and cups for $10. Now you sold 15 lemonades for $2 each, and you earned $30.
Your gross profit is $20 (30 - 10).
The gross profit margin is just a fancy way to say, "How much money did you make as a percentage of what you spent?"
To find out, we divide the gross profit (which is $20) by the revenue (which is $30).
So kid, your gross profit margin is 66.67%!
This means you made 66.67 cents in profit for every dollar you earned.
Higher gross profit margins are usually better for businesses because they mean you are making more money on every sale.
That's all there is to it!
Let's say, you bought all the lemons, sugar, and cups for $10. Now you sold 15 lemonades for $2 each, and you earned $30.
Your gross profit is $20 (30 - 10).
The gross profit margin is just a fancy way to say, "How much money did you make as a percentage of what you spent?"
To find out, we divide the gross profit (which is $20) by the revenue (which is $30).
So kid, your gross profit margin is 66.67%!
This means you made 66.67 cents in profit for every dollar you earned.
Higher gross profit margins are usually better for businesses because they mean you are making more money on every sale.
That's all there is to it!