Profit margin
Also called: margin, net margin, net profit margin
A profit expressed as a percentage of revenue, showing how much profit each ₹100 of sales produces.
Margin = profit ÷ revenue × 100. Using gross profit gives the gross margin, operating profit the operating margin, and net profit the net margin.
Margins make businesses of different sizes comparable, but they vary widely between industries, so they are most useful when comparing similar companies.
Example
A company with revenue of ₹200 crore and net profit of ₹16 crore has a net margin of 8%.
Learn more in these lessons
- Revenue, expenses and profitWhat is the difference between revenue and profit?
- Profit margins and what they revealWhat do profit margins tell you about a company?
Related terms
Spotted a mistake or something unclear? Report it by email. Here is how corrections work.