The profit margin is a company’s profitability, and unlike the standard 1 inch most papers use, companies would like a profit margin of a substantially larger number, like 2. According to my notes, this is at least twice the value of 1.
Profit margin is calculated through gross margin and net profit, as each measures profit through different means. This allows businesses to gain the clearest and most comprehensive picture of the company’s overall profitability.
A company’s profit margin is vital and should be calculated constantly to preserve financial accuracy.