Profit-margin meaning

A ratio that shows the percentage of profits that are earned on sales. When the term “profit margin” is used, it usually refers to a gross profit margin. See also gross profit margin, operating profit margin, and net profit margin.
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The ratio of net income to net sales of a company expressed as a percentage.

For example, if a company has $10,000 net income and $100,000 net sales, then profit margin equals ($10,000 : $100,000) .10, or 10%.

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