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It basically calculates the amount of profit that the business retains from every dollar sale. In simple terms, it is a percentage that revenue turns into profit after deducting costs. The profit margin can be utilized by lenders, investors, and business owners as an indication of the health status of a company. A high margin indicates retention of more profits from sales, and on the other hand, low or negative margins may indicate problems in cost management. There are three common types of profit margins: gross, operating, and net. Each takes away more expenses from revenue and provides another insight into profitability. https://weeklyreporters.com/how-to-calculate-profit-margin-for-small-businesses/