What is Gross Margin? What is Operating Margin? How to calculate Gross Margin and Operating Margin? Gross Margin and Operating Margin are two key financial terms to understand if you want to evaluate the financial performance of a company on the income statement or P&L (profit and loss statement). In this video, we will discuss the definition of Gross Margin and Operating Margin, and walk through the calculation of Gross Margin and Operating Margin for four well-known global companies in different industries.

⏱️TIMESTAMPS⏱️
0:00 Introduction
0:30 Gross Margin and Operating Margin definition
1:38 Cost Of Goods Sold vs Cost Of Revenue
1:56 Gross Margin and Operating Margin comparison
3:49 Gross Margin and Operating Margin in a services company (Accenture)
4:29 Gross Margin and Operating Margin in a software company (Adobe)
5:59 Gross Margin and Operating Margin in an online retail company (Amazon)
6:26 Gross Margin and Operating Margin in a tech company (Apple)
7:02 Gross Margin and Operating Margin summary

Revenue minus Cost of Goods Sold is Gross Margin. Gross Margin minus SG&A and R&D is Operating Margin or EBIT. Operating Margin minus interest and taxes is net income. GM% and OM% are important #financialratios.

We will go through the calculation of Gross Margin and Operating Margin for each of these four companies in this video: Accenture (NYSE: ACN), Adobe (NASDAQ: ADBE), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL).

Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how #financialstatements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!