How to Calculate Profit Percentage & Profit Margin?

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The profit gained by a company in comparison to the total revenue generated by it is called profit margin. This metric is expressed in percentage. When you sell a product at a price higher than its cost price, you gain a profit. The overall profit and the performance of a business can be assessed by calculating the profit margin and profit percentage. These figures help to evaluate the business’ financial stability and potential for growth. A high profit margin should be maintained to achieve financial success.

Any business person needs to understand the different types of profit calculation and their formula. This knowledge will help you calculate profit and assess the performance of your business.

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how to calculate profit margin or profit percentage
What is Profit and its Different Types?
When the revenue generated by a business surpasses its overall investment cost austria phone number list and taxes, it is said to have earned profit. Profit is divided into different categories. Each of these is calculated using different formulas. It is important to learn how to calculate the profit percentage for each of these.

Types of Profit and How to Calculate them:
Gross Profit
Gross profit refers to the total revenue an organisation churns after subtracting the expense involved in manufacturing, marketing and selling its products. The same holds true for companies operating in the service industry. The amount involved in providing the service is deducted from the total revenue generated by selling the services to derive the gross profit. In short, subtract the cost of goods sold (COGS) from the revenue generated to get gross profit.