[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.00,0:00:07.89,Default,,0000,0000,0000,,A business gross margin is a rough gauge of how profitable its operations are it
Dialogue: 0,0:00:12.72,0:00:14.91,Default,,0000,0000,0000,,measures how much sales revenue the company retains after all the direct
Dialogue: 0,0:00:17.10,0:00:19.04,Default,,0000,0000,0000,,costs associated with making a product or providing a service are accounted for
Dialogue: 0,0:00:19.04,0:00:22.11,Default,,0000,0000,0000,,direct costs refer to materials labor
Dialogue: 0,0:00:22.11,0:00:24.63,Default,,0000,0000,0000,,and expenses related to producing a
Dialogue: 0,0:00:24.63,0:00:26.88,Default,,0000,0000,0000,,product overhead expenses such as
Dialogue: 0,0:00:26.88,0:00:28.86,Default,,0000,0000,0000,,management salaries and the cost of
Dialogue: 0,0:00:28.86,0:00:30.48,Default,,0000,0000,0000,,building a corporate headquarters are
Dialogue: 0,0:00:30.48,0:00:33.27,Default,,0000,0000,0000,,not direct costs the greater of business
Dialogue: 0,0:00:33.27,0:00:35.25,Default,,0000,0000,0000,,margin the more money it will have to
Dialogue: 0,0:00:35.25,0:00:37.32,Default,,0000,0000,0000,,invest in other important areas such as
Dialogue: 0,0:00:37.32,0:00:40.20,Default,,0000,0000,0000,,marketing and research gross margin is
Dialogue: 0,0:00:40.20,0:00:42.33,Default,,0000,0000,0000,,generally quoted as a percentage of the
Dialogue: 0,0:00:42.33,0:00:44.70,Default,,0000,0000,0000,,company sales just take revenue
Dialogue: 0,0:00:44.70,0:00:47.22,Default,,0000,0000,0000,,generated for a given period subtract
Dialogue: 0,0:00:47.22,0:00:49.50,Default,,0000,0000,0000,,the production expenses otherwise known
Dialogue: 0,0:00:49.50,0:00:51.69,Default,,0000,0000,0000,,as the cost of goods sold and divide
Dialogue: 0,0:00:51.69,0:00:54.57,Default,,0000,0000,0000,,this entire figure by revenue let's take
Dialogue: 0,0:00:54.57,0:00:56.91,Default,,0000,0000,0000,,a look at Rose candy company the company
Dialogue: 0,0:00:56.91,0:00:58.80,Default,,0000,0000,0000,,earns annual revenue of 1 million
Dialogue: 0,0:00:58.80,0:01:01.26,Default,,0000,0000,0000,,dollars and has a cost of goods sold
Dialogue: 0,0:01:01.26,0:01:04.50,Default,,0000,0000,0000,,totaling $700,000 this gives the company
Dialogue: 0,0:01:04.50,0:01:06.51,Default,,0000,0000,0000,,a gross margin of 30%
Dialogue: 0,0:01:06.51,0:01:09.27,Default,,0000,0000,0000,,this means that Rose candy retains 30
Dialogue: 0,0:01:09.27,0:01:11.67,Default,,0000,0000,0000,,cents from each dollar of total revenue
Dialogue: 0,0:01:11.67,0:01:13.92,Default,,0000,0000,0000,,made say that Rose candies main
Dialogue: 0,0:01:13.92,0:01:16.26,Default,,0000,0000,0000,,competitor Lilly chocolate enjoys a
Dialogue: 0,0:01:16.26,0:01:18.90,Default,,0000,0000,0000,,margin of close to 40 percent this could
Dialogue: 0,0:01:18.90,0:01:20.73,Default,,0000,0000,0000,,mean that Lilly chocolate has lower
Dialogue: 0,0:01:20.73,0:01:23.28,Default,,0000,0000,0000,,input costs such as raw materials and
Dialogue: 0,0:01:23.28,0:01:25.95,Default,,0000,0000,0000,,wages for its factory workers it could
Dialogue: 0,0:01:25.95,0:01:27.99,Default,,0000,0000,0000,,also mean that Lilly chocolate gets away
Dialogue: 0,0:01:27.99,0:01:29.73,Default,,0000,0000,0000,,with selling and higher prices by
Dialogue: 0,0:01:29.73,0:01:32.28,Default,,0000,0000,0000,,offering specialty items in either case
Dialogue: 0,0:01:32.28,0:01:34.44,Default,,0000,0000,0000,,Rose candy will likely want to adjust
Dialogue: 0,0:01:34.44,0:01:37.05,Default,,0000,0000,0000,,its strategy to remain competitive in
Dialogue: 0,0:01:37.05,0:01:39.33,Default,,0000,0000,0000,,the long run while it doesn't give an
Dialogue: 0,0:01:39.33,0:01:41.13,Default,,0000,0000,0000,,investor the whole picture when it comes
Dialogue: 0,0:01:43.32,0:01:45.72,Default,,0000,0000,0000,,to profitability gross margin is extremely useful as a yardstick to make
Dialogue: 0,0:01:45.72,0:01:47.64,Default,,0000,0000,0000,,sure that a company is operating with maximum efficiency.