What is the difference between profit margin , gross margin , and revenue ?

Question

What is the difference between profit margin , gross margin , and revenue ?

In: 135

Answer 1

I sell cars at a car dealership:

Revenue: I sell a Jeep for $50k

Gross Margin: Dealership paid Jeep $45k for the inventory, so dealership only keeps $5k

Profit Margin: salesperson got their commission, dealership pays rent and utilities, employee health insurance, other various insurance, etc. gets paid from gross margins brought in on cars sold. After the bills are paid, $1000 is left. That’s the profit margin.