Which of the following best describes gross margin?

Gross margin is best defined as the total revenue minus the Cost of Goods Sold (COGS). This measurement reflects the money that remains from sales after accounting for the direct costs associated with producing the goods sold by a company. It indicates how efficiently a company uses its resources to produce goods, providing insight into pricing strategies and production efficiency.

When calculating gross margin, only the direct costs related to production, such as materials and labor, are considered, which distinguishes it from net profit or total profit calculations that take into account all operating expenses, taxes, and interest (as highlighted in the other options). This specific focus on the relationship between revenue and COGS gives stakeholders a clearer picture of a company's financial performance regarding its core business operations.