Profit Margin Definition
What is Profit Margin (FAQs)
Profit margin is any profit a company generates goes to its owners, who may choose to distribute the money to shareholders as income, or allocate it back into the business to finance further company growth.
The method of calculating profit is simple: subtract a business’s expenses from its total revenue over a fixed amount of time.
There are three primary levels of profit of interest to investors: gross profit, operating profit, and net profit.
To find profit margin, divide gross income by a company’s revenue then multiply the result by 100 to make it a percentage.