Quarterly abnormal gross profit margin
factor.formula
Where: Normal growth multiplier (sales growth rate) =
This formula calculates the quarterly abnormal gross profit margin. The numerator measures the difference between actual gross profit growth and expected gross profit growth based on sales growth. The denominator is total assets for the period and is used to normalize for comparison between companies of different sizes.
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Gross profit for the current quarter (q)
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Gross profit in the same period last year (q-4)
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Cash received from sales of goods and services rendered in the current quarter (q)
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Cash received from sales of goods and rendering of services during the same period last year (Q-4)
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Total assets at the end of the current quarter
factor.explanation
The quarterly abnormal gross profit margin measures the ratio of a company's actual gross profit growth to the portion that is expected based on sales growth. A positive value indicates that gross profit growth exceeds sales growth, which means that gross profit margin has increased, which may be due to improved product competitiveness, optimized cost control, or adjustments to pricing strategies. A negative value, on the contrary, indicates that the company's gross profit growth has not kept pace with sales growth and requires further analysis. This indicator is important in identifying potential drivers of changes in a company's profitability. It should be noted that a high abnormal gross profit margin is not an absolute positive and may need to be analyzed in combination with industry conditions and the company's specific business. For example, one-time non-recurring gains and losses may lead to abnormal changes in gross profit.