Misconceived margins

What are gross margin and net margin? Can we use them interchangeably? The answer to the last is no, but you might have been.

As you can guess, the title of the article hints at the should-be-difference, which we will cover below.

If you are not sure about the answer, you are not alone. In fact, these two terminologies are mostly misused or misunderstood.

Gross margin is the difference between Net Sales and COGS (Cost of Goods Sold), that can be represented in either percentage or amount.

You will come across it in your Profit & Loss statement. Whereas Net Margin is the difference of net sales and all expenses, also represented as percentage or amount.

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