Profit Margin
Analyzing FirmsSponsored Content
Curriculum Content
Profit Margin can be found at any point of the income statement by using “X” Profit divided by Sales Revenue. If you desire to express the number as a percentage, multiply the number by 100. You want to see high margins. This indicates low expenses and waste.
A company with a profit margin that is too high may be skimping on product or service quality. They also may be thrifty, which can hurt a company’s long-term reputation as a quality service or product provider. Even though it’s good for your returns in the short run, if a company cuts too deeply into their quality they will eventually lose customers.
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- Performance Indexes of U.S Economy
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