Profit Margin

Profit Margin is calculated as net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings

Net Profit
= --------------

Thus if a company sells $100,000 in cargo and has earnings of $12,000, its profit margin is $12,000/ $100,000*100 =12%

A higher profit margin indicates a more gainful company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage; a 12% profit margin, for example, means the company has a net income of $0.12 for each dollar of sales.

Looking at the income of a company often doesn't tell the complete story. Increased earnings are good, but an increase does not indicate that the profit margin of a company is improving,

For example company ABC has a net income of 100 crore from sales of 1000 crore, giving it a profit margin of 10% (100 crore/1000 crore). If in the next year net income rises to 150 crore on sales of 2000 crore , giving it a profit margin of 7.5% the company's profit margin would fall to 7.5%, Note; for free NSE BSE indian stock trading calls and tips see my home page.

1 comment:


Dear Visitor,
Would like to appreciate the effort of the webmaster for creating such a wonderful blog which is very helpful for the visitors.
Would like to add few notes here like if we are trading in SHARE MARKET NSE BSE FREE INTRADAY TIPSspecially in NSE and BSE which are one of the most popular stock exchanges of the world then we need to take care of the few things like
1. Always trade in limit
2. Do not make tade on emotional basis
3. Always try to get professional support before taking risk in stock market
4. Rely on professional research rather than speculation.

This is for sure if we follow above 4 points then we can always stay in good profit.