<h2>Gross Profit Margin: A Comprehensive Guide</h2>

<p>Gross Profit Margin (GPM) is a financial metric that measures a company's profitability by comparing its gross profit to its revenue. It's a key performance indicator (KPI) that helps traders and investors assess a company's financial health and efficiency. GPM is calculated as:</p>

<p><strong>Gross Profit Margin = (Gross Profit / Revenue) x 100</strong></p>

<h2>How It Works</h2>

<p>Gross profit is calculated by subtracting the cost of goods sold (COGS) from revenue. COGS includes all direct costs incurred to produce the goods or services sold. Here's the breakdown:</p>

<ul>
  <li>Revenue: Total sales from goods or services</li>
  <li>COGS: Direct costs associated with producing those goods or services</li>
  <li>Gross Profit: Revenue - COGS</li>
</ul>

<p>For example, if a company has $100,000 in revenue and $60,000 in COGS, its gross profit would be $40,000. To find the GPM, we divide the gross profit by the revenue and multiply by 100:</p>

<p>GPM = ($40,000 / $100,000) x 100 = 40%</p>

<h2>Why It Matters for Traders</h2>

<p>GPM is crucial for traders and investors for several reasons:</p>

<ul>
  <li><strong>Profitability Assessment</strong>: GPM helps evaluate a company's ability to generate profits from its sales.</li>
  <li><strong>Industry Benchmarking</strong>: It allows comparison of a company's performance with industry peers.</li>
  <li><strong>Trend Analysis</strong>: Tracking GPM over time can reveal trends and help predict future profitability.</li>
</ul>

<h2>Example</h2>

<p>Consider two companies in the same industry, Apple and Samsung. In 2020, Apple had a GPM of 38.4%, while Samsung's was 19.8%. This indicates that Apple was more profitable on a gross basis than Samsung, which could influence investment decisions.</p>

<h2>Key Takeaways</h2>

<ul>
  <li>Gross Profit Margin is a vital metric for assessing a company's profitability and efficiency.</li>
  <li>It's calculated by dividing gross profit by revenue and multiplying by 100.</li>
  <li>Traders use GPM to compare companies within an industry and to analyze trends over time.</li>
  <li>On MetaTrader 5, you can find GPM data in the fundamental analysis section for individual stocks.</li>
</ul>