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Profit margin is a financial ratio that measures the profitability of a company. It shows the percentage of revenue that remains as profit after deducting all expenses. There are two main types of profit margin:
• Gross profit margin: This measures the profitability of a company's core operations before considering overhead costs and taxes. It is calculated as (Gross profit / Revenue) x 100%.
• Net profit margin: This measures the overall profitability of a company after considering all expenses, including overhead costs and taxes. It is calculated as (Net profit / Revenue) x 100%.
