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Profit Margin

Profit margin is profit divided by revenue, expressed as a percentage. A 10% margin means ₹10 of profit for every ₹100 of sales. Gross margin subtracts only the direct cost of goods; net margin subtracts all costs and taxes.

Why It Matters

Thin margins leave a business little room to absorb cost shocks.

In India

Garment exporters running on margins of 5% to 8% could not absorb a 50% tariff without losing money.