Profit Margin
Profit margin measures how much of each revenue dollar becomes profit. It's expressed as a percentage and comes in several types: gross margin (after cost of goods), operating margin (after operating expenses), and net margin (after all expenses including taxes).
Understanding the Concept
• Gross margin: (Revenue - Cost of Goods) / Revenue • Operating margin: Operating Income / Revenue • Net margin: Net Income / Revenue • Higher margins generally indicate competitive advantages
Real-World Example
A software company has $100M revenue, $20M cost of goods, $30M operating expenses, and $10M in taxes/interest. Gross margin is 80% ($80M/$100M), operating margin is 50% ($50M/$100M), and net margin is 40% ($40M/$100M). These healthy margins reflect scalable software economics.
How Strykr Helps
Strykr's AI assistant helps you understand and apply Profit Margin concepts to your trading. Get personalized guidance and real-time market analysis to make better decisions.
Try Strykr Free