## Profit Margin

## Online Calculators **for Business & Investment**

**Profit Margin**

The **Profit Margin** is one of the most popular of all the ratios out there; and for good reason. Ultimately, it tells us how much profit is generated from our sales; specifically the percentage of sales revenue that ends up in profit.

It is a key ratio because the final goal of business is profit, and while profit can’t be generated without maximising sales revenue, expenses are another fact of business life and keeping track of this relation between revenue and costs is vital.

So if you’re in business or you’re an investor, you need to know how well the business in question keeps its cost under control and how much revenue that is ideally generated actually ends up on the bottom line.

If you have a Profit Margin of, say, 22%, then this means that 22% of your sales revenue ends up as profit and the remaining 78% is used up on expenses over the period.

*Profit Margin Calculator*

**The calculator asks for:**

*Net Income*, which is found on the income statement.

*Sales Revenue*, which is also found on the income statement.

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