Gross Margin Analysis | ANB Bank (2024)

FAQs

What is a good gross profit margin for a bank? ›

The average gross profit margin across all industries is 36.56%, while the average net profit margin is 8.54%. Banks (particularly money centers) have the highest average profit margins of any industry at 100% gross and 30.89% net. The auto and truck industry has the lowest average gross profit at 12.45%.

The gross margin of a product is measured by subtracting the cost of goods sold from the selling price. The cost of goods sold includes all costs associated with producing the goods or services sold by a company. Gross margin percentage is obtained by dividing gross margin by sales revenue.

A higher gross margin means each $1 of revenue is more valuable to your business. Compare Company A with a 10% gross margin to their competitor Company B with an 80% gross margin. Company A will be able to reinvest 10 cents of every dollar of sales back into the company. Company B will have 80 cents on the dollar.

Gross profit tells you about your business's efficiency. It's a key financial KPI your management team should monitor. You analyze its increases or decreases against your cost of sales (or cost of goods sold) to identify which factors are behind your changes in efficiency.

You may be asking yourself, “what is a good profit margin?” A good margin will vary considerably by industry, but as a general rule of thumb, a 10% net profit margin is considered average, a 20% margin is considered high (or “good”), and a 5% margin is low.

A Good Gross Profit Margin is around 30 – 35% on average, but varies widely by industry. Refer to our averages listed in this post to determine if your business is tracking well with the competition.

What is a good gross profit margin ratio? On the face of it, a gross profit margin ratio of 50 to 70% would be considered healthy, and it would be for many types of businesses, like retailers, restaurants, manufacturers and other producers of goods.

Your Gross Margin Needs to be 50-55 Percent. In retail, gross margin is an easily calculated number. It's the difference between how much you purchase a product for and how much you sell the product for stated as a percentage. Example: You sell a widget for $100 that you purchased for $60.

There are basic levels of gross profit margin which are considered low, average, or good. Generally, a gross profit margin of between 50–70% is good and anything above that is very good.

EBITDA and gross profit measure profit in different ways. Gross profit is the profit a company makes after subtracting the costs associated with making its products or providing its services, while EBITDA shows earnings before interest, taxes, depreciation, and amortization.

How to improve GP margin? ›

Gross Profit Margin – This KPI measures the percentage of total sales revenue that a company retains after incurring direct costs. Gross profit margin shows revenue minus direct costs, expressed as a percentage.

Generally, a 10% operating profit margin is considered an average performance, and a 20% margin is excellent.

What is a good gross profit margin ratio? On the face of it, a gross profit margin ratio of 50 to 70% would be considered healthy, and it would be for many types of businesses, like retailers, restaurants, manufacturers and other producers of goods.

The average operating profit margin is about 10%. A good operating profit margin to aim for is 15% and above. To calculate your company's operating profit margin, first calculate operating profit. Then, divide operating profit by revenue and multiply that number by 100.

Key Takeaways. Net interest margin (NIM) reveals the amount of money that a bank is earning in interest on loans compared to the amount it is paying in interest on deposits. NIM is one indicator of a bank's profitability and growth. The average NIM for U.S. banks was 3% as of Q1 2023.