What is meant by product's CM ratio?

The Contribution Margin (CM) ratio is a financial metric that measures the proportion of sales revenue that exceeds total variable costs, indicating how much of the revenue contributes to covering fixed costs and generating profit. It is calculated by dividing the contribution margin (sales revenue minus variable costs) by total sales revenue. A higher CM ratio suggests that a greater percentage of sales is available to cover fixed costs, while a lower ratio indicates that variable costs consume a larger portion of sales revenue. This ratio is crucial for decision-making regarding pricing, product mix, and profitability analysis.