What is the difference between profit margin , gross margin , and revenue ?
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Revenue/income is the (gross) amount received from sales or other income streams.
Gross profit is income less costs attributable to that income (e.g. cost of sales – the cost of stock purchases)
Operating profit is gross profit less other operating expenses (admin, distribution).
Net profit is what’s left after all expenses are paid including interest and tax. Tax is the last thing to be deducted.
Margin is the difference between the gross and net figures divided by the gross figure, mark-up is the difference divided by the net figure. For example, item ‘x’ costs you £1, you sell it for £1.50, that’s a 50% mark-up and a 33% margin. You make sales of £1.5m with goods costing £1, that’s a 33% gross profit margin.
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