Profit margin is a measure of profitability. It's calculated as
net income / revenue = profit margin
and expressed as a percentage.
For example: Suppose a company produces bread and sells it for 5 units of currency. It costs the company 3 units of currency to produce the bread and it also had to pay an additional 1 unit of currency in tax.
That makes the company's net income 1 unit of currency (5 - (3 + 1)) and its revenue 5 units of currency.
The profit margin therefore is (1 / 5) or 20%
See also
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