Definition of Profit margin:
The amount by which revenue from sales exceeds costs in a business.
There are several types of profit margin. In everyday use, however, it usually refers to net profit margin, a company’s bottom line after all other expenses, including taxes and one-off oddities, have been taken out of revenue.
Ratio of profit after taxes to cost-of-sales, often expressed as a percentage. It is one of the measures of the profitability of a firm, and an indicator of its cost structure. Formula: After-tax profit x 100 ÷ cost of sales.
Profit margin is one of the commonly used profitability ratios to gauge the degree to which a company or a business activity makes money. It represents what percentage of sales has turned into profits. Simply put, the percentage figure indicates how many cents of profit the business has generated for each dollar of sale. For instance, if a business reports that it achieved a 35% profit margin during the last quarter, it means that it had a net income of $0.35 for each dollar of sales generated.
How to use Profit margin in a sentence?
- Expressed as a percentage, profit margin indicates how many cents of profit has been generated for each dollar of sale.
- To continue with trade, they had to first distinguish the profit margin , so they could have more knowledge about profitability.
- The profit margin was quite large considering the amount of fixed costs on this project which indicated the high demand was to thank.
- We have a gross profit margin of 80 percent.
- You should always try and shoot for the highest profit margin you can when you are trying to offload a product.
- Profit margins are used by creditors, investors, and businesses themselves as indicators of a company's financial health, management's skill, and growth potential.
- As typical profit margins vary by industry sector, care should be taken when comparing the figures for different businesses.
- Profit margin gauges the degree to which a company or a business activity makes money, essentially by dividing income by revenues.
- While there are several types of profit margin, the most significant and commonly used is net profit margin, a company’s bottom line after all other expenses, including taxes and one-off oddities, have been removed from revenue.
Meaning of Profit margin & Profit margin Definition