Information AboutProfit Margin |
| CATEGORIES ABOUT PROFIT MARGIN | |
| profit | |
| financial ratios | |
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Profit margin = Net Income / Revenue For example, suppose a company produces bread and sells it for 10 units of Currency . It costs the company 6 units of currency to produce the bread and it also had to pay an additional 2 unit of currency in Tax . That makes the company's net income 2 unit of currency (10 - (6 + 2)) and its Revenue 10 units of currency. The profit margin would be (2 / 10) or 20%. Profit margin is an indicator of a company's pricing policies and its ability to control costs. Differences in competitive strategy and product mix cause profit margin to vary among different companies. SEE ALSO EXTERNAL LINKS
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