Profit Margins

Profit margin is a financial metric that shows how much profit a company makes from its sales, expressed as a percentage. It’s calculated by dividing the company’s net profit (what’s left after expenses) by its total revenue (sales income), then multiplying by 100. A higher profit margin indicates a company is efficient at converting sales into profit. For example, a 10% profit margin means that for every $100 earned in sales, the company keeps $10 as profit. Profit margin helps assess the company’s profitability and efficiency in managing costs relative to its sales.