Profit Margin Explained + Formula: How to Calculate & Use the Profit Margin
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Profit Margin Explained + Formula:
How to Calculate & Use the Profit Margin.
The Profit Margin is a Profitability Ratio that can form part of Your Financial Statement Ratio Analysis.
In this video, which is great for the investor, manager or student, you will learn the Formula, where to Find the Data Inputs, what is a Good or Bad Result and some Initial Questions for Your Analysis.
Add to your accounting and finance knowledge now for better business decisions and improved stock selection.
"The Profit Margin is one of the most popular of all the ratios out there, and for good reason. Ultimately, it tells us how much profit is generated from our sales, specifically the percentage of sales revenue that ends up in profit.
It is a key ratio because a primary financial performance measure of a business is profit (it’s the bottom line!). And while profit can’t be generated without sales revenue (selling your product/service is why you’re in business!), expenses are another fact of business life and keeping these expenses as low as possible leads to profit being as great as possible (within your sales range).
So if you’re in business or you’re an investor, you need to know how well the business in question keeps its cost under control and how much revenue (an often quoted figure) actually ends up on the bottom line. It’s also important as a measure of ‘pricing power’, i.e. the relative power of the business within its market to charge a premium price and maintain market share."
KEYWORDS: profit margin, formula, explained, ratio analysis, profitability, financial ratio, accounting, finance.
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