You may be asking yourself, “what is a good profit margin?” A good margin will vary considerably 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. Again, these guidelines vary widely by industry and company size, and can be impacted by a variety of other factors.
When assessing the profitability of a company, there are three primary margin ratios to consider: gross, operating, and net. Below is a breakdown of each profit margin formula.
In 2018, the gross margin is 62%, the sum of $50,907 divided by $82,108. The net margin, by contrast, is only 14.8%, the sum of $12,124 of net income divided by $82,108 in revenue.
EBITDA Margin EBITDA margin = EBITDA / Revenue. It is a profitability ratio that measures earnings a company is generating before taxes, interest, depreciation, and amortization. This guide has examples and a downloadable template