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