Gross margin is revenue minus the cost of goods sold, divided by revenue, expressed as a percentage. It shows how much of every ringgit in sales a company keeps after covering the direct cost of producing what it sold, before accounting for other operating expenses.
For example, a company with RM10 million in revenue and RM6 million in cost of goods sold has a gross profit of RM4 million and a gross margin of 40% — it keeps 40 sen of every ringgit in sales before overhead, marketing, and other costs are deducted.
Gross margin is a useful early screen for pricing power and cost efficiency, and tracking it over several years can reveal whether a company is facing rising input costs or losing pricing leverage to competitors. It’s typically read alongside net margin to see how much of that gross profit survives down to the bottom line.