Learning about investing can be daunting for beginners…

This is where the “What Is…?” series comes in. In this series, we demystify investing terms for those who are just starting out in the investing world. Right now, let’s look at the term “gross profit margin” and what it means for you as an investor.

So, What Is Gross Profit Margin?

Gross profit margin is a profitability ratio that shows how much gross profit a company makes for every dollar of revenue generated.  Gross profit is what the company has after subtracting from revenue the cost of goods sold to create that particular product or service. For example, for a store selling lemonade, one component of cost of goods sold would be the cost of lemons. The gross profit margin is an important formula in investing. The higher the gross profit margin, the higher the pricing power a company has....