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Definition of profit margin – key figures simply explained

The profit margin is a company's earnings before interest and taxes (EBIT) in relation to sales.
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TransparentShare - Definition of profit margin

Definition of profit margin

The profit margin is a company's earnings before interest and taxes (EBIT - Earnings Before Interests and Taxes) in relation to the company's sales.

 

 

Significance for the evaluation
The pre-tax profit margin expresses how profitable a company is. A high margin is a sign of high profitability. Inexpensive manufacturing companies can achieve higher margins more easily than companies with a high cost pool.

Calculation
Pre-tax profit margin in % = (EBIT / sales) * 100

Rating
+1 point: pre-tax profit margin> 12%
0 points: pre-tax profit margin between 6% and 12%
-1 point: pre-tax profit margin <6%

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