Profitable in tough times. In the last two years, these companies have had positive net income and their gross margin has increased by 20% year over year.

Expanding profit margins

Gross margin equals revenues minus cost of goods sold divided by revenues and represents perhaps the best proxy for a business’s value added. The higher the gross margin, the greater the company’s competitive advantage. 

Gross margins don't include operating expenses such as taxes, interest, or even payroll. High operating expenses or customer acquisition costs can negate the advantage of high gross margins. 

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