Profit Margin
Profit margin is a financial metric that measures the profitability of a business. It is calculated by dividing net income by total revenue. It is expressed as a percentage and is used to compare the profitability of different businesses. Profit margin is an important indicator of a company’s financial health and is used by investors and analysts to evaluate the company’s performance.
History of Profit Margin
The concept of profit margin has been around since the early days of business. It was first used by merchants to measure the profitability of their businesses. In the modern era, profit margin is used by investors and analysts to evaluate the performance of a company. It is also used by businesses to measure their own performance and to compare their performance to that of their competitors.
Comparison Table
| Company | Net Income | Total Revenue | Profit Margin |
|---|---|---|---|
| Company A | $1,000,000 | $10,000,000 | 10% |
| Company B | $2,000,000 | $20,000,000 | 10% |
Summary
Profit margin is a financial metric that measures the profitability of a business. It is calculated by dividing net income by total revenue and is expressed as a percentage. It is used by investors and analysts to evaluate the performance of a company and by businesses to measure their own performance and compare it to that of their competitors. For more information about profit margin, you can visit websites such as Investopedia and The Balance.
See Also
- Gross Profit Margin
- Operating Profit Margin
- Net Profit Margin
- Return on Assets
- Return on Equity
- Return on Investment
- Earnings Per Share
- Price-Earnings Ratio
- Debt-to-Equity Ratio
- Cash Flow
