What is Profit Margin?
A definition of Profit Margin
“Profit margin is a financial metric that shows the percentage of revenue exceeding costs. It is used to determine how efficiently a company converts sales into actual profit.”

Business Glossary > What is Profit Margin?
Examples of Profit Margin in a Sentence:
The company improved its profit margin through cost reduction strategies.
A high profit margin indicates the company is managing expenses efficiently.
Our goal is to achieve a profit margin of 15% this fiscal year.
Why is Profit Margin Important in Business?
Understanding profit margin is vital for businesses to assess their financial health and operational efficiency. It indicates how well a company manages its costs relative to the revenue it generates, which is critical for strategic planning and investment decisions.
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Associated Terms
Here are some associated business terms and synonyms for “Profit Margin”:
- Profitability Ratio
- Margin Percentage
- Net Profit Margin
Apple’s Profit Margin
Apple consistently maintains a strong profit margin due to its premium pricing strategy and efficient cost management. By focusing on innovative products and brand loyalty, Apple has set industry benchmarks for high profit margins.
Final Notes on Profit Margin
When analyzing profit margins, consider the industry benchmarks and economic conditions. Monitoring profit margins over time can provide insights into a company’s operational effectiveness and guide strategic decisions.
This has been a definition of Profit Margin meaning.
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