Profit Margin

What is Profit Margin?

Profit margin is a financial ratio that measures the percentage of revenue that remains as profit after all expenses are paid. It is a key indicator of a company’s pricing strategy and its ability to control costs.

Why It Matters

• It helps business owners understand how much money they actually keep for every dollar of sales.

• High profit margins provide a cushion against economic downturns or unexpected increases in costs.

• Comparing margins with industry peers helps identify competitive advantages or weaknesses.