Explain the concept of profit margin.

Explain the concept of profit margin.

Profit margin is a financial metric that measures the profitability of a company by calculating the percentage of profit generated from each unit of revenue. It is calculated by dividing the net profit by the total revenue and multiplying the result by 100. The profit margin indicates how efficiently a company is able to generate profit from its operations. A higher profit margin indicates that a company is able to generate more profit from each unit of revenue, while a lower profit margin suggests lower profitability. Profit margin is an important indicator for investors and stakeholders as it helps assess the financial health and performance of a company.