Gross profit margin is a key metric used to measure a company’s financial health by providing insight into their profitability. It’s calculated by subtracting the cost of goods sold (COGS) from total revenue, then dividing the result by total revenue. This figure tells you how much of every dollar earned is left after all costs have been paid. In other words, it reveals what percentage of a company’s revenue remains as profit for shareholders. To get a better grasp of this important metric, think of it like this: gross profit margin gauges how efficiently a company is using its resources to make money and maximize profits. So if you want to stay competitive, don’t forget to keep an eye on your own gross profit margin.