A profit margin is the proportion of revenue sales a company earns after deducting different types of expenses. There are three frequently used profitability metrics in financial analysis - gross profit margin, operating profit margin (EBIT margin), and net profit margin (net income margin). Below are the formulas for calculating each of these metrics: Gross Profit Margin = (Revenue - COGS) / Revenue x 100 EBIT Margin = (Revenue - COGS - Operating Expenses) / Revenue x 100 Net Income Margin = (Revenue - COGS - Operating Expenses - Interest - Taxes) / Revenue x 100
Learn More About Profit MarginRead CFI's guide to better understand the topic and see examples of calculation of different margins. CFI Marketplace also offers other accounting templates which you might find useful for your daily accounting tasks.