First, the concept of gross profit margin.
Gross profit margin, also known as sales gross profit margin, refers to the operating cost deducted from operating income, so gross profit margin can represent the relationship between product cost and income, and is an indicator to measure profitability, usually expressed as a percentage.
Second, the sales gross profit margin analysis
Gross sales margin refers to how much money can be used for expenses in various periods and make profits after deducting sales costs from sales revenue per yuan. The gross profit margin of sales is the initial basis of the net profit rate of sales of enterprises, and it is impossible to make a profit without a large enough gross profit margin.
Gross profit margin of sales is the basis of net profit rate of sales, and it is impossible to make a profit without sufficient gross profit margin. The higher the gross profit margin of sales, the smaller the proportion of sales cost in the net sales income, and the higher the operating profit when the period expenses and other business profits are fixed.
Significance of using gross profit index:
First, the gross profit margin of sales helps to choose the investment direction.
Gross sales margin is an important operating index of listed companies, which can reflect the competitiveness and profit potential of the company's products.
It reflects the initial profitability of enterprise product sales and is the starting point of enterprise net profit. Without high gross profit margin, it is impossible to form big profits.
Compared with the same industry, the gross profit margin of a company is obviously higher than that of its peers, which shows that the company's products have high added value and high product pricing, or the company has cost advantage and competitiveness compared with its peers.
Second, the gross profit index helps to predict the development of enterprises and measure the growth of enterprises.
When analyzing the profit space and changing trend of an enterprise's main business, the gross profit margin of sales is an important indicator. The advantage of this index is that it can analyze the profitability of the main products or businesses of an enterprise, which is very helpful to judge the core competitiveness of an enterprise and its growth trend.
Third, the gross profit margin of sales helps to evaluate managers' operating performance.
The ownership and management rights of modern enterprises are separated, and the salary of enterprise managers should be linked to their own performance. Because the increase of gross profit margin of product sales can reflect the improvement of product profitability to a certain extent, it can be used as one of the indicators to measure managers' operating performance.