gross profit margin

Beginner 💰 Finance / Accounting

Definition

The percentage of revenue remaining after subtracting cost of goods sold, revealing how much you make before paying for all the other stuff that keeps businesses running. High margins are good; low margins mean you're working hard to stay broke.

Example Usage

Our 60% gross profit margin looks impressive until you remember we spend 55% of revenue on sales and marketing to acquire customers.

Origin

Profitability metric formalized in early 20th century financial analysis

Fun Fact

Software companies brag about 80%+ gross margins while grocery stores operate on 2-3%, which is why one can afford foosball tables and the other can't.

Source: Financial performance metrics

Related Terms

Advanced

embedded option

A feature within a security that gives the issuer or holder rights to take specific actions, like calling bonds early or converting to equity. The financial equivalent of fine print that can drastically change deal terms.

💰 Finance / Accounting
Advanced

vulture fund

Investment funds that buy distressed debt for pennies then aggressively pursue collection, like financial hyenas picking at corporate carcasses. Compassion not included.

💰 Finance / Accounting
Beginner

tax-free

The mythical unicorn of financial transactions: money that the government has graciously decided not to touch. Income or purchases that escape taxation, usually because lawmakers needed to incentivize something or felt charitable that particular legislative session. The two most beautiful words in accounting, often followed by fine print and eligibility requirements.

💰 Finance / Accounting
Advanced

futures

Financial contracts obligating parties to buy or sell assets at predetermined future dates and prices, essentially allowing traders to bet on tomorrow's commodity prices today. These derivatives let farmers hedge against price drops and speculators gamble on market movements without ever touching an actual bushel of wheat. The futures market adds liquidity and price discovery to markets while giving financial news anchors something to dramatically discuss at market close.

💰 Finance / Accounting
Intermediate

redemption

In finance, it's when you finally get your money back from investments, bonds, or that pawn shop guitar you regret selling. In real estate, it's your last-chance opportunity to reclaim property before foreclosure becomes permanent. Basically, it's the 'never mind, I'd like that back' clause in various financial and legal agreements, usually with a fee attached because nothing's ever free.

💰 Finance / Accounting
Beginner

sweep account

A bank account that automatically transfers excess funds to higher-yielding investments overnight, then sweeps them back for daily operations. Like having a very diligent financial butler who never sleeps.

💰 Finance / Accounting

Translate This Term

See “gross profit margin” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.

Try the Translator

Share This Term

Post on XShare on FacebookShare on LinkedIn

Discover a Term

Beginner

WINE and DINE

stupid ass phrase used by Georgian ex-Air Force reserve mofo's in an attempt to make you think they want to treat you li...