Definition for : Gross margin

There is absolutely no clear cut definition of what gross Margin should cover, and everyone tends to include whatever they fancy under this heading. Logically, the Cost of making products should be deducted from Sales. So, on the mass Market retail sector, Expenses (wholesale Purchases of retail products which account for around 80% of Sales) should be deducted, and the gross Margin will be equal to a Sales Margin or a Margin on Raw materials used. On the movie theatre sector, the figure will be Sales less the payments made to distributors who supply the product – the film.At a bank, it's the difference between Interest earned and Interest paid.

(See Chapter 9 Margin analysis: Structure of the Vernimmen)

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