Gross Margin refers to gross profit divided by revenue or sales. It measures trading or manufacturing profitability before operating overheads, finance cost, tax, and other non-production expenses. In MSME underwriting, it is read as part of the financial assessment and is usually compared across periods, peers, banking conduct and management explanations. For example, a rising margin can show pricing power, while a sudden fall may point to cost pressure, discounting or weak operating control. It matters because the number can influence eligibility, limit sizing, repayment comfort, leverage view and early-warning assessment. The common mistake is to use it mechanically; seasonality, accounting treatment, one-off items and data mismatches can change the credit interpretation.