Now that we have defined all the elements

[suchona.kani.z]

Another important element for calculating the profit margin is the revenue (R). In short, it represents the income generated by the sale of products, excluding returns and discounts.

Gross profit and net profit
In general, profit is the difference between revenues and costs . In this case, we make a further distinction.

The value of gross profit is given by the difference between revenues and variable costs .

PL = R - CV

gross profit MARGIN

While net profit , also called income, profit or net revenue is given by the difference between total revenues and costs :

PN = R - CT

NET PROFIT MARGIN

that constitute it, let's take a closer look at the profit margin and its formula.

Profit margin, what is it?
Here we are at the heart of our article. Let's see what this profit margin is, why it is important and how it is calculated.

You must have understood that, as an entrepreneur , you need to know precisely how much your company is earning.

If you don't know this data, as Lord William Thomson netherlands email list Kelvin said, you won't be able to improve it and therefore you won't be able to grow your business.

But how is this value calculated?

First of all I can tell you that it is a figure that is expressed as a percentage and represents the profit that the company obtains from the sale of products net of the expenses necessary for production .

So, for every euro of your revenue you have the ability to calculate your profit margin. When we talk about margin, in this case, we mean a percentage.

So the profit margin represents the percentage of profit for each euro that your company gets from the sale of your products.

Complicated?
You are probably confusing it with the profit we saw before.

Don't worry, it's normal. I'll tell you right away that they are not the same thing, but net profit and gross profit allow us to calculate the profit margin and now we'll see how.

To do these calculations we need formulas, so I warn you that it will be a bit boring but, believe me when I tell you that it is all very simple and knowing these values ​​will help you manage your company better.