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Profitability improvement

Prioritizing Gross Profit Margin Enhancement over Net Profit Margin

December 30, 2023

Why might a company prioritize increasing gross profit margin over net profit margin?

Companies might prioritize increasing gross profit margin as it directly reflects the efficiency of production and pricing strategies. A higher gross margin indicates better control over production costs, potentially enhancing competitiveness. Focusing on gross profit margin allows companies to optimize operational efficiencies before addressing broader financial factors affecting net profit margin.

Tags : Gross Profit Margin , Net Profit Margin , Profitability Improvement

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