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Gross Margin
In the world of finance, a key ratio used to measure a company's profitability is the gross profit margin. This ratio is calculated by dividing the gross profit, which is the difference between sales and the cost of goods sold, by the total sales. Essentially, it represents the percentage of each dollar of sales that results in gross profit. This metric is a valuable tool for investors and analysts alike as it provides insight into a company's efficiency in producing and selling its products or services.
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