How do I calculate the profit margin?
Profit margin is a key metric for evaluating the financial health of a business. It is an important indicator of a company’s efficiency and profitability and is calculated by dividing net profit by total revenue. To calculate profit margin, use the formula:
Profit Margin = (Net Profit / Total Revenue) * 100.
For small businesses and startups, understanding and tracking profit margin is essential to success. It can provide valuable insight into how well operations are running, and it can help inform decisions about pricing, inventory management, and other operational costs. For businesses that use software such as Sourcetable, tracking profit margin can be easy and straightforward.