Gross margin is a crucial financial metric that offers valuable insights into a company’s profitability and efficiency in generating revenue from its core operations. It is a fundamental indicator used by businesses, investors, and analysts to assess financial performance.
Gross margin is a financial metric that indicates the percentage of revenue a company retains after deducting the cost of goods sold (COGS). In other words, it represents the profit a company makes from its core operations, such as operating expenses, taxes, interest.
Gross margin is important because of following ways:
Several potential potential reasons for a decrease in gross margin:
A good gross margin varies according to industry, business needs, and models. There is no universally accepted or standard definition of good gross margin because it depends on factors such as the sector in which the company operates, its cost structure, and the competitive landscape. Usually, a higher gross margin is preferred, as it indicates that a company is retaining a larger amount of its revenue after accounting for the direct costs.
Gross margin and gross profit are distinct metrics employed by companies to assess their profitability and can be located in the company’s income statement. Despite often being used interchangeably, working on figures with different meanings and calculations is necessary.
Gross margin focuses solely on the relationship between COGS and revenue. Net margin is a financial measure expressed as a percentage that represents the proportion of net profit to total revenue.
These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).
Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.
eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.