What is the difference between Gross Margin, Profit, and Revenue? Which one is the largest, and...

Question

Question

What is the difference between Gross Margin, Profit, and Revenue? Which one is the largest, and which one is the smallest?

Answer 1

Answer #1

Revenue: It can be defined as a firms total sales during a particular period.

Gross Margin: It can be defined as a difference between the firms revenue and cost of goods sold i.e.:

Gross Margin = Revenue - Cost of Goods Sold

Profit: It is computed after deduction of general, administrative, selling, administrative and other expenses from the Gross Margin of the firm.

Among these three, Revenue is the largest and Profit is the smallest.

Feel free to ask in case of any query relating to this question

Answer 2

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