Gross Margin Coefficient of Variation (CoV)
How stable are the company's gross margins over time?
Definition
Gross Margin CoV measures the variability of gross profit margin relative to its mean. Stable margins suggest pricing power and a durable competitive position.
Formula
Where:
= standard deviation, = mean
Interpretation
| Range | Assessment |
|---|---|
| < 5% | Highly stable — strong pricing power |
| 5% – 15% | Moderate — some competitive pressure |
| > 15% | Volatile — margins are unpredictable |
In Finsco
Computed by the audit moat command. Requires at least 2 years of data.
Related Metrics
- ROIC Stability — stability of overall returns
- Economic Moat — ROIC − WACC