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profitability-market

by io.finance-tools.market

calculate_gross_margin

Read-onlyIdempotent

Calculate gross margin: gross profit divided by net sales — the share of revenue retained after the direct cost of goods sold. Formula: Gross Margin = Gross Profit / Net Sales. WHEN TO USE: Use to assess product-level economics and pricing power before operating expenses are considered. WHEN NOT TO USE: Do NOT use gross margin to compare companies with different cost classification practices (COGS boundary varies). BEHAVIOUR: pure deterministic calculation — no side effects, no network or storage access; idempotent and non-destructive; identical inputs always produce identical outputs. Division by zero or non-finite inputs returns an explicit error instead of a number. RETURNS: JSON object { gross_margin: decimal (e.g. 0.40 = 40%), gross_margin_pct: number (e.g. 40.0), inputs }. PARAMETERS: gross_profit (required): Gross profit = net sales - COGS, e.g. 400000. Must be >= 0. net_sales (required): Net sales / revenue, e.g. 1000000. Must be > 0.

Input Schema

TableJSON Schema
NameRequiredDescriptionDefault
net_salesYesNet sales / revenue, e.g. 1000000. Must be > 0.
gross_profitYesGross profit = net sales - COGS, e.g. 400000. Must be >= 0.

TDQS

A4.4/5.0
Behavior5/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

The BEHAVIOUR section goes well beyond the annotations, detailing that the calculation is pure, deterministic, has no side effects, and returns an explicit error for division by zero or non-finite inputs. This adds meaningful context that annotations alone do not convey, and there is no contradiction.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness4/5

Is the description appropriately sized, front-loaded, and free of redundancy?

The description is well-organized with clear sections (formula, WHEN TO USE, WHEN NOT TO USE, BEHAVIOUR, RETURNS, PARAMETERS) and is mostly information-dense. There is slight redundancy between the opening explanation and the explicit formula, preventing a perfect score.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness5/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

For a simple two-parameter calculation with no output schema, the description covers every aspect needed to invoke it correctly: formula, parameter semantics, return value shape, error behavior, and usage context. Nothing essential is missing.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters3/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema description coverage is 100%, so the baseline is 3. The description's PARAMETERS section essentially restates the schema's descriptions and constraints without adding new meaning or clarifying relationships beyond what the schema already documents.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

The description states a specific verb and resource ('Calculate gross margin') and immediately defines the formula, making the tool's purpose unambiguous. The precise formula and explanation of 'share of revenue retained after the direct cost of goods sold' clearly differentiates it from sibling ratio calculators such as net margin or operating margin.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines4/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

WHEN TO USE and WHEN NOT TO USE are explicitly provided with concrete context: assessing product-level economics and a warning about comparing companies with different COGS classification practices. However, it does not explicitly name an alternative sibling tool, so it stops short of the full 5.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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TDQS

A4.7/5.0
Disambiguation5/5

Each tool calculates a distinct financial metric with its own formula, inputs, and output. Even similarly named return-on-capital tools (ROA, ROE, ROCE, ROIC) are clearly differentiated by their denominators and described use cases.

Naming Consistency5/5

All 12 tools follow the exact same calculate_<metric_name> snake_case pattern. The verb is consistent and metric names map directly to the formulas, making the set highly predictable.

Tool Count5/5

Twelve tools is a well-scoped size for a financial ratio calculator covering profitability, return, valuation, and dividend metrics. Each tool addresses a distinct calculation and none feel redundant or unnecessary.

Completeness4/5

The tool surface covers core profitability margins, return ratios, EPS, dividend yield, payout ratio, P/E, and P/B. Minor gaps exist such as price-to-sales, EV/EBITDA, or EBITDA margin, but the primary domain of profitability and market valuation is well represented.

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