Profit Margin (PM)

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Profit Margin could be defined in several ways such as these; PM is a ratio of a company’s profit divided by its revenue. Or it could be defined as the percentage of revenue remaining after all costs, depreciation, interest, taxes and other expenses have been deducted.
It indicates the profitability of a business. The higher the number, the more profitable the business.

The importance of Profit Margin to an investor is to compare the success of a company to another, then with Profit Margin an investor can use it to see how he/she improves over time.

Formula for calculating Profit Margin is:
PM = (R-C)/R * 100
Where;
PM = Profit Margin
R = Revenue
C = Cost of goods sold
Supposing the revenue for an item is #50 and the cost is #30. We have (#50-#30)/#50 * 100 = 40%

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