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