Probably the most important margin used by businesses to know the total profit percentage over a period of time.

When net profit is divided by sales, the product we get is the profit margin. Usually used by small companies for comparing similar industries. It is denoted in percentage. The more profitable the better.

Profit Margin=Total Income/Net Sales

#### GROSS PROFIT MARGIN FORMULA

Gross Profit Margin=Gross Profit/Net Sales

### SOLVED EXAMPLES

**Question 1: Find the profit margin when you buy a pen for Rs. 100 and sell it for Rs. 150.**

**Solution:**

Given Net Sale = Rs.150

Net Profit = Rs. 150 – Rs. 100 = Rs. 150

Profit Margin = Net Sale/Net Profit

Profit Margin = $50/$150

Profit Margin=0.33

Hence, the Percentage of Profit Margin = 33.33%