Valuation Terms

Gross Margin

Gross profit shown as a percentage of revenue. It shows how much money is left after direct costs. Why it matters: Buyers watch gross margin trends because falling margins can signal pricing pressure, rising costs, poor job costing, or weakening competitive position.

Related terms

Gross Profit

Revenue minus the direct cost of providing the product or service. Why it matters: Gross profit shows how much money is available to cover overhead after direct costs, making it an important clue about pricing power and operational efficiency.

Revenue

The total money the business brings in before expenses. Why it matters: Buyers look at revenue trends, customer mix, and repeatability to understand whether the business is growing, shrinking, or dependent on a few sources.

More from Valuation Terms

Add-Backs Adjusted EBITDA CapEx Cash Flow EBITDA Enterprise Value Equity Value Free Cash Flow Gross Profit Multiple Net Income Net Working Capital

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