Finance Dictionary : Profit Margin


Learn about Profit Margin, a vital financial metric that indicates a company's financial performance and profitability.



Profit Margin – An Indicator of Financial Performance


Profit margin, often referred to simply as margin, is a key financial metric that serves as an indicator of a business’s financial performance. It represents the percentage difference between a company’s total revenue and its total expenses. A higher profit margin is generally indicative of a more profitable business, while a lower margin suggests lower profitability.


This metric is used by businesses, investors, and financial analysts to assess and compare the efficiency of operations across different companies and industries. It can help in evaluating pricing strategies, cost control measures, and overall financial health.


Understanding profit margin is crucial for making informed decisions and strategic planning, as it provides valuable insights into a company’s profitability and financial viability.


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