Question

Profit margin is synonymous with the term _______ and tells whether or not total profit will be positive.

Answer 1

Answer: Average profit

Explanation:

Both average profit and profit margin show the percentage of profit that a company can expect to receive from $1 worth of sales. It is calculated by dividing the profits by the sales figure,

If sales are $10 and profits are $3, the profit margin would be:

= 3/10

= 30%

This means that for every $1 of sales, there is $0.30 in profit. This method shows us whether the total profit will be negative or positive by showing us individual product profit.