MM

Revenue = how much does the company makes.
If the company has a shoe that cost $100 and manage to sell 1000 units, the total revenue would be $100,000

Cost of Revenue / Cost of Goods Sold (COGS) = if the company’s shoe cost $50 to make, and they sold 1000 units of it, the total COGS would be $50,000

Gross Profit = Revenue – COGS
That is not the true income of the company as there are many other expenses such as operation cost such as

• Rent – $10,000

• Salary – $20,000

• R&D – $10,000

Net Income = Gross Profit – Expenses
Using an example show above, that would be $50,000 – $40,000 and net income would be $10,000.

Once you have your Net Income, you can calculate your Net Margin that is
Net Income | $10,000
—————— = Net Margin | ———– = 10%
Revenue | $100,00