Gross Margin is defined as:

Gross Margin is defined as:

• A. It is equal to Net income.
• B. It is revenue minus total expenses.
• C. It is equal to total assets minus total liabilities.
• D. It is equal to the difference between Revenues and COGS.

Answer: (D)

Gross margin measures the profitability of selling goods after accounting for the direct costs tied to those goods. It is Revenues minus Cost of Goods Sold (COGS), showing how much is left to cover other expenses and contribute to profit after the production costs are paid. This is different from net income, which subtracts all expenses (operating, interest, taxes) from revenue, and different from equity, which is assets minus liabilities. So the difference between Revenues and COGS is the best definition of gross margin.

Gross margin measures the profitability of selling goods after accounting for the direct costs tied to those goods. It is Revenues minus Cost of Goods Sold (COGS), showing how much is left to cover other expenses and contribute to profit after the production costs are paid. This is different from net income, which subtracts all expenses (operating, interest, taxes) from revenue, and different from equity, which is assets minus liabilities. So the difference between Revenues and COGS is the best definition of gross margin.