Gross margin refers to the difference between the revenue generated from sales and the cost of goods sold, expressed as a percentage. It is a key financial metric that reflects the profitability of a company’s core business operations, before taking into account other expenses such as overhead and taxes. A high gross margin indicates that a company is able to sell its products or services at a significant markup, while a low gross margin may suggest that the company is struggling to cover its production costs. In short, gross margin is a crucial measure of a company’s financial health and efficiency in generating profits from its primary operations.