Profit Margin

Profit margin equation

A profit margin is calculated by knowing the net income and sales number. A high profit margin is good for business while a low one requires attention to pull the business off the brink of collapse.

The Net Income is the total amount gained after the removal of expenses. And sales is the amount from sales.

To calculate: Net Income / Sales.

This means your net income should be divided by the sales. The result will indicate a high or low-profit margin.