How to Calculate Net Income from Gross Margin is a financial computation that determines the remaining profit after deducting the cost of goods sold from total revenue. For instance, a company with $100,000 in revenue and $50,000 in COGS has a gross margin of $50,000.
Calculating Net Income from Gross Margin is vital for financial analysis, enabling businesses to assess profitability, optimize pricing strategies, and make informed decisions. Historically, gross margin calculations emerged alongside modern accounting practices in the late 19th century.