What impact does a high gross margin usually have on a company?

A high gross margin typically indicates that a company is able to sell its products or services at a significant markup over the cost of goods sold. This situation usually benefits the company's bottom line—essentially its net income—because it implies that the company retains a larger proportion of revenue after accounting for production or operational costs.

Having a high gross margin allows a company greater flexibility in its pricing strategies and can provide it with more resources to invest in growth opportunities, such as research and development, marketing, or expansion strategies. Additionally, it can signal to investors that the company has a solid competitive position in the market, further enhancing its financial health. This is why a high gross margin is often associated with positive financial outcomes for a business.

While it may influence employee salaries indirectly, the primary impact of a high gross margin is reflected in the company's financial performance rather than directly tied to employee compensation or lacking any overall influence on finances.