Gross Margin (Marx)

Gross Margin (Marx) equals Gross Profits (sales minus cost of goods sold) / Total Assets (depreciation deducted)

Professor Robert Novy-Marx in a paper The Quality Dimension of Value  Investing defined a quality company as one that had a high gross income ratio.

In the paper Robert showed that this ratio has the same market beating capability as other valuation ratios such as the price to earnings ratio for example.

 

How to use the ratio

Available as a screening ratio: Yes

Available as an output column ratio: Yes (Look for it under the Quality heading)

 

How to select the highest Gross Margin Marx companies

To find companies with the highest Gross margin Marx values (highest Gross Margin companies) set the slider from 0% to 10%.

Remember

All ratios are calculated on a trailing 12 months (TTM) basis.

This means the last twelve months (not the company’s financial year) is compared to the same period in the past.

We do this to make sure that the screener data includes the latest, most up to date, financial results of the company.

 

Read more about Gross Margin Novy-Marx

Read more about the Novy-Marx high gross income ratio here: Have you been using the wrong quality ratio?

Click here to start using the Gross Margin Novy-Marx Ratio in your portfolio NOW!