Profit margin - Financial definition
Concise definition of the term profit margin
Profit margin is the percentage of revenue that exceeds the costs of goods sold, indicating a company's efficiency in generating profits.
Comprehensive definition of the term profit margin
Profit margin measures the profitability of a business by assessing the proportion of revenue left over after deducting the costs directly associated with producing goods or services. It's a key metric for investors and analysts to evaluate a company's operational efficiency, competitiveness, and financial health. For instance, a higher profit margin signifies better cost management and pricing strategies, while a lower margin may suggest pricing pressure, higher production costs, or inefficiencies in operations.