How Do You Determine A Profit Margin As A Percentage Of Gross Income?
Profit margin is a useful metric to investors and financial analysts. The profit margin illustrates how much profit a company is able to generate from each sale. Factors influencing profit margin are competition with other businesses in the same industry, cost to manufacture or procure the items a company sells and the cost of doing business in general. By nature, some companies achieve high margins, and others produce low margins. Thus, calculating profit margin percentage is a valuable tool for making comparisons between competitors in the same industry. Obtain the income statement of the business concern for which you’re calculating the profit margin. You can find income statements on company websites, from daily business newspapers, including the Wall Street Journal and Investor’s Business Daily, and from web sources, such as Money Central at MSN.com. Obtain the income statements of industry competitors, if the goal is to make a comparison of profit margins between companies. Locat
