Define Gross Margin and Operating Income

question 50

Essay

Define gross margin and operating income. Explain how they are used in evaluating a company.

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Definitions:

Owner Investments

Funds or assets introduced by the owner(s) into the business to provide financial resources for operations or expansion.

Revenues

The total income generated from sales of goods or services before any expenses are deducted.

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of shareholders or proprietors.

Revenues

The total amount of income generated from the sale of goods or services related to a company’s primary operations.