What does the gross margin express as a percentage?

The gross margin expresses gross profit as a percentage of net sales, which is a critical financial metric for evaluating a company's profitability related to its core operations. Gross profit is calculated by subtracting the cost of goods sold from total revenue or net sales. By expressing gross profit as a percentage of net sales, the gross margin provides insights into how efficiently a company is producing its goods and how much revenue is left after accounting for the direct costs associated with producing those goods.

A higher gross margin percentage indicates that a company retains more profit on each dollar of sales, which can signify good management of production costs and pricing strategy. In contrast, operating expenses, net income, and total revenue provide different insights into financial performance but do not directly relate to the efficiency of converting sales into gross profit. Thus, the correct answer effectively captures the essence of financial health in the context of revenue generation and cost management.