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in this video were going to talk about the profit margin the gross margin and the operating margin so lets talk about the profit margin also referred to as the net profit margin so this value is equal to the net income divided by the annual sales of the company or the sales for the last 12 months times 100 percent now keep in mind the net income is the difference between the sales which is the same thing as the revenue minus all of the expenses so im gonna write te for total expenses so lets look at an example so lets analyze two companies lets just call this company a and company b so lets say that company a had sales of 100 million just to use nice numbers and company b have the same annual sales of 100 million now the total expenses for company a lets say its 80 million whereas the total expenses for company b for that year were going to say its 50 million so which company has the larger profit margin would you say its company a or b well first we need to calculate the n
