Profit margin

Profit margin is a measure of profitability. It is calculated by dividing net income by revenue and expressing it as a percentage.

For example: Suppose a company produces bread and sells it for 5 units of currency. It cost the company 3 units of currency to produce the bread and it also had to pay an additional 1 unit of currency in tax.

That makes the company's net income 1 unit of currency (5 - (3 + 1)) and its revenue 5 units of currency.

The profit margin therefore is (1 / 5) or 20%

This article is a stub. You can help Wikipedia by expanding it (http://www.mywiseowl.com/index.php?title=Profit_margin&action=edit).

Retrieved from "http://www.mywiseowl.com/articles/Profit_margin"

This page has been accessed 135 times. This page was last modified 03:30, 26 Nov 2004. All text is available under the terms of the GNU Free Documentation License (see Copyrights for details).