Gross Margin Is the Comparator

Since not all revenue is the same, how does an investor compare one company to another?

Gross margin is one key comparator.

It measures how much revenue is available to invest in the growth of the business.

Gross profit is calculated by taking revenue minus the cost of goods sold.

Gross margin is calculated by taking gross profit divided by revenue.

The higher the gross margin the more capital efficient the business.

This means the company can go further with less funding.

Companies vary in their gross margin.

Some have very efficient product delivery models while others have high-cost models.

While not all revenue is the same, gross margin predicts funds available for future growth. 

Consider the gross margin in your investment analysis of a business.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

---

Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org  

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/  

For Feedback please contact info@tencapital.group   

Please follow, share, and leave a review.

Music courtesy of Bensound.

Copyright (c) 2024, Hall Martin and investorconnect.org. All rights reserved.

Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.