To calculate profit margin, you need to divide the company's net income by its revenue and multiply the result by 100% to express it as a percentage.
Here's an example:
Suppose a company has the following financials for the year:
Revenue: $100,000
Net income: $10,000.
To calculate the profit margin, you would need to divide the net income by the revenue and multiply the result by 100%:
Profit margin = Net income / Revenue * 100%
= $10,000 / $100,000 * 100%
= 10%Therefore, the company's profit margin is 10%.
