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Profit Margins Explained

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First published at 14:16 UTC on November 21st, 2018.

the.part.time.economist

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Profit Margin, Gross Margin, and Operating Margin all measure a businesses profitability. Beginning accounting students sometimes confuse these three margins, so let me help clear up any confusion that you may have.

Gross Margin is the profitabilit…

Gross Margin is the profitability after we account for Cost of Goods Sold [COGS]

Operating Margin is the profitability after accouting for Cost of Goods Sold and Selling, General, and Administrative Expenses.

Profit margin is what most people think of when they hear the word profit. It describes the profitability after all expenses (COGS, SGA, interest expense, taxes) have been accounted for. #finance #business #accounting

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