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Last Reviewed: October 26, 2026
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What is Gross Margin? Raw Material Spread
#Profitability#Gross Margin#Raw Material Spread#Cost of Goods Sold
The Answer
Gross Margin measures a company's profit spread after deducting direct manufacturing expenses (cost of goods sold, raw materials) from net sales.
Why it Matters
Declining gross margin signals raw material inflation or a loss of pricing power (inability to pass cost increases to customers).
Sentinel Insight
“Watch the spread between Gross Margin and EBITDA margin. A widening gap indicates rising operating overheads.”
📊 How to Interpret
Margin > 50%
Elite Pricing Power
Margin 30% - 50%
Healthy / Standard
Margin 15% - 30%
Margin Compression
Margin < 15%
Low Profit Core
In Risk Context
Profitability domain metric for FMCG and Manufacturing sectors.
Detect risk early
Flagium tracks these signals across multiple quarters to help you avoid structurally weak companies before it reflects in price.
Screen companies by Gross Margin trends →🔍🔁 Related Topics
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