Gross margin is the money left over after subtracting the cost of goods sold from the revenue. It’s the amount of sales that the business uses to cover overhead and other indirect costs. To compute the gross margin, simply subtract the cost of goods sold from the revenue. For gross margin percent, divide the gross margin by revenue.
Figure below shows the financial statement.
Gross margin is shown in cell C5, and gross margin percent is shown in cell D5.
Gross Margin: =C3-C4
Gross Margin Percent: =C5/$C$3
The gross margin formula simply subtracts cell C4 from cell C3. The gross margin percent divides C5 by C3, but note that the C3 reference is absolute because it has dollar signs. This allows you to copy the formula to other lines on the income statement to see the percentage of revenue, a common analysis performed on income statements.
Excel Solution can be found in https://github.com/alcadelina/Excel-Gross-Margin
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