Profit Margin

Profit Margin

Gross Margin: Gross Income or Gross Profit as a percentage of Sales
Operating Margin: Operating Income or Operating Profit as a percentage of Sales
Return on Sales: Net Income or Net Profit as a percentage of Sales

This number describes what income is left over after expenses are deducted from sales.

What do you mean by that? We use ‘margin’ is to denote a percentage (of Sales).

People will think of profit margins at different points on the Income Statement. Production might look at Gross Margin while operations might look at Operating Margin; the Finance Department looks at Return on Sales.

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