ADJUSTED GROSS MARGIN
The calculation employed to arrive with the profitability of a company, product line or product. The adjusted gross margin accounts for the expense of carrying inventory, which is not putted into consideration in the gross margin calculation. Therefore, the adjusted gross margin provides a more accurate view at a product's profitability than the gross margin. The formula:
n Period Gross Profit Dollars – n Period Carrying Cost Dollars n Period Sales Dollars
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