Profit Margin Definition

Profit margin is determined by comparing net income to revenue. The result is expressed as a percentage that shows how efficiently a business can convert income to profits.

Profit Margin Expanded Definition
Profit margin offers a way to measure how well a business uses income to pay for expenses. This is referred to as the profitability of a business.

The profitability is determined by comparing the net income of a business to the revenue generated. The result is expressed as a percent. The higher the profit margin, the more profitable the business.

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Last Updated By

Rachel Blakely-Gray | Apr 17, 2023