This profit margin template will allow you to calculate the gross profit, EBITDA, and net profit margins.
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Profit margin is a measure of a company’s earnings (or profits) relative to its revenue. The two main types of profit margins are gross profit margin (gross profit divided by revenue) and net profit margin (net income divided by revenue).
When assessing the profitability of a company, there are two main profit margin ratios to consider: gross and net. Below is a breakdown of each formula.
Gross Profit Margin = Gross Profit / Revenue x 100
Net Profit Margin = Net Income / Revenue x 100
You may be asking yourself, “what is a good profit margin?” A good margin will vary by industry, but as a general rule of thumb, a 10% net profit margin is considered average, a 20% margin is considered high (or “good”), and a 5% margin is low. Of course, these guidelines can vary widely by industry, company size, and a variety of other factors.
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