Adjusted Gross Margin

Filed Under » ,
Dictionary Says

Definition of 'Adjusted Gross Margin'

A calculation used to determine the profitability of a product, product line or company. The adjusted gross margin includes the cost of carrying inventory, whereas the gross margin calculation does not take this into consideration. The adjusted gross margin, therefore, provides a more accurate look at the profitability of a product than the gross margin allows. The equation is as follows:

n Period Gross Profit Dollars – n Period Carrying Cost Dollars
n Period Sales Dollars
Investopedia Says

Investopedia explains 'Adjusted Gross Margin'

Adjusted gross margin goes one step further than gross margin because it includes these inventory carrying costs, which greatly affect the bottom line of a product’s profitability. For example, two products could have identical, 25% gross margins. Each, however, could have different associated inventory carrying costs. Once these factors are included, the two products could show significantly different margins and profitability. This can help identify products and lines that are underperforming.

Inventory carrying costs include:
-Receiving and transferring inventory
-Insurance and taxes
-Warehouse rent and utilities
-Inventory shrinkage
-Opportunity cost
Search results for

'Adjusted Gross Margin'

  • Ralcorp Needs To Offer More

    http://stocks.investopedia.com/stock-analysis/2011/Ralcorp-Needs-To-Offer-More-RAH-CAG-GIS-K-KFT-THS-CPB1130.aspx
    ... Generally accepted accounting principles gross margin shrank four and a half points,
    while the adjusted gross margin declined a more tolerable 70 basis points. ...

  • Cisco's Painful Transition

    http://stocks.investopedia.com/stock-analysis/2011/Ciscos-Painful-Transition-CSCO-HPQ-JNPR-MOT-FFIV-RVBD-EMC0214.aspx
    ... looking at GAAP or adjusted numbers, gross margin fell and fell hard (down more
    than four points by GAAP accounting and three points with adjusted numbers). ...

  • Financial Statements: Conclusion | Investopedia

    http://www.investopedia.com/university/financialstatements/financialstatements10.asp
    ... versions of earnings per share, such as the "as reported," "adjusted," and "pro ... Gross
    margin (1 – cost of goods as % of revenue) since it tells you about ...

  • The Marvel That Is Coca-Cola

    http://stocks.investopedia.com/stock-analysis/2011/The-Marvel-That-Is-Coca-Cola-KO-DPS-PEP-GIS-NSRGY-MJN0211.aspx
    ... adjusted conclusions. Operating income was up about 11%, with adjusted gross
    margin declining from 65.5% to 61.5 percent. Currency ...

  • Diamond Foods Sharpens Growth

    http://stocks.investopedia.com/stock-analysis/2011/Diamond-Foods-Sharpens-Growth-DMND-KFT-CAG-UL-PEP0607.aspx
    ... While the adjusted EPS was an earnings beat, the $7.7 million in reported ... Gross margin
    rose 430 basis points from 22.4% to 26.7%, while operating margin was 7.9 ...

  • 4 Stocks With Value And Growth

    http://stocks.investopedia.com/stock-analysis/2009/4-Stocks-With-Value-And-Growth-HWKNCRISMGWMTGPS0922.aspx
    ... Its adjusted gross margin in Q3 was 210 basis points higher year-over-year and
    management re-affirmed its previous guidance for full-year adjusted EPS of $2.35 ...

  • Apply Patience To Applied Materials

    http://stocks.investopedia.com/stock-analysis/2010/Apply-Patience-To-Applied-Materials-AMAT-INTC-AAPL-LCRX-ASML-AIXG1122.aspx
    ... ago period. Adjusted gross margin rose six full points from the year-ago
    period and even more on a sequential basis. Operating profit ...

  • UNFI - Everything Is Right But The Price

    http://stocks.investopedia.com/stock-analysis/2011/UNFI---Everything-Is-Right-But-The-Price-UNFI-SYY-WFM-SWY-SVU-KR-NAFC1201.aspx
    ... Gross margin slid about 40 basis points from last year and 75 bps from the ... Operating
    income was up about 11%, on an adjusted basis, and though the company saw ...

  • An Overview Of Itemized Deductions

    http://www.investopedia.com/articles/taxes/08/itemized-deductions-overview.asp
    ... can deduct any aggregated expenditures that exceed 2% of their adjusted gross incomes. ...
    fees paid out of pocket, legal and accounting fees, and margin interest. ...

  • OM Group - Unreasonably Cheap, Or Cheap For A Reason?

    http://stocks.investopedia.com/stock-analysis/2011/OM-Group---Unreasonably-Cheap-Or-Cheap-For-A-Reason-OMG-FCX-SOA-ALB-GB-STP-SCCO-AMSC1115.aspx
    ... The company said that its adjusted gross margin actually rose more than a point,
    while adjusted operating income rose 38%, from the year-ago period. ...

Related Articles

Partner Links