For example, if a company has total revenue of $100,000 and COGS of $70,000, its gross profit would be $30,000, and its gross margin would be 30%. This means that for every $1 of revenue, the company is able to keep 30 cents as profit after accounting for the cost of producing and selling its products or services. Gross profit is an important metric for evaluating a company's financial performance, as it indicates the amount of profit generated from the sale of its products or services before accounting for other expenses, such as administrative and selling expenses, and taxes.
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