Читать книгу Financial Management 101 - Angie Mohr - Страница 19

The profit margin is a common measure of how well you can translate gross sales into bottom-line profit. It is calculated as —

Profit margin = Net income ÷ Sales

If your sales are $113,423 and your net income is $22,475, your profit margin is —

Profit margin = Net income ÷ Sales

= $22,475 ÷ $113,423 = 19.8%

This tells you that for every dollar of sales, you are generating almost 20 cents in net profit. As you can well imagine, in general, the higher the profit margin, the better off the business.