Investment Language 101 Series: TERM OF THE DAY: -- What Is: ' Profit Margin ' | E.219 | Trading Candle Cheat Sheet Incl. Each Episode. by barrydutton

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Investment Language 101 Series: TERM OF THE DAY: -- What Is: ' Profit Margin ' | E.219 | Trading Candle Cheat Sheet Incl. Each Episode.
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![](https://steemitimages.com/DQmWyN71naYPUrjJwdVVb4jpPen4GBAJV2SfSyxmwQ5ynPa/image.png)
    

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A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.  

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#### Bitshares 101 Focus/Resources Section for New Crypto Folks now included near the end of each post - starting just prior to Christmas 2017.  BTS is a Decentralized Exchange and much more.   Very undervalued! 

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*It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.*

It is *specifically* designed this way to keep it short and simple.  

People can then search out extra info if they wish.

I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.  

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## TERM OF THE DAY:

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## What is.... 

####  '  Profit Margin ' ?

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Profit margin is a profitability ratios calculated as net income divided by revenue, or net profits divided by sales.

Net income or net profit may be determined by subtracting all of a company’s expenses, including operating costs, material costs (including raw materials) and tax costs, from its total revenue. Profit margins are expressed as a percentage and, in effect, measure how much out of every dollar of sales a company actually keeps in earnings. A 20% profit margin, then, means the company has a net income of $0.20 for each dollar of total revenue earned.

While there are a few different kinds of profit margins, including “gross profit margin,” “operating margin,” (or "operating profit margin") “pretax profit margin” and “net margin” (or "net profit margin") the term “profit margin” is also often used simply to refer to net margin. The method of calculating profit margin when the term is used in this way can be represented with the following formula:

Profit Margin = Net Income / Net Sales (revenue)

Other types of profit margins have different ways of calculating net income so as to break down a company’s earnings in different ways and for different purposes.

Profit margin is similar but distinct from the term “profit percentage,” which divides net profit on sales by the cost of goods sold to help determine the amount of profit a company makes on selling its goods, rather than the amount of profit a company is making relative to its total expenditures.


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## Breaking Down... 

####  ' Profit Margin  ' :

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Rarely can a company’s individual numbers (like revenue or expenditures) indicate much about the company’s profitability, and looking at the earnings of a company often doesn't tell the entire story. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving. 

For example, suppose Company A’s revenue for one year is $1 million, and its total expenditures are $750,000. This would yield a profit margin of 25% ($1M - $0.75M / $1M = $0.25M / $1M = 0.25 = 25%). If, during the following year, its revenue increases to $1.25 million, and expenditures increase to $1 million, its profit margin is then 20% ($1.25M - $1M / $1.25M = $0.25M / $1.25M = 0.20 = 20%). Although revenue has increased, Company A’s profit margin has diminished as expenses have increased at a faster rate than revenue.

In the same way, an increase or decrease in a company’s expenditures does not necessarily indicate that the company’s profit margin is improving or worsening. Suppose that Company B’s revenue and expenditures in one year are $2 million and $1.5 million, respectively, making its profit margin 25%. The following year the company does some restructuring, reducing its expenditures by eliminating a product line, and thereby reducing total revenue. 

If Company B’s revenue and expenditures in the second year are now $1.5 million and $1.2 million, respectively, then its profit margin is now 20%. Even though Company B was able to substantially cut its costs, its profit margin suffered because its revenue decreased more quickly than its expenditures did.



-- Limitations of 'Profit Margin':

Though profit margin is a helpful and popular ratio for gauging a company’s profitability, like any financial metric or ratio, it comes with certain accompanying limitations.

While profit margin can be very useful for comparing companies, one should only use profit margin to compare companies within the same industry, and ideally with similar business models. Companies in different industries may often have wildly different business models and revenue streams, such that they may also have very different profit margins. 

This could render a comparison generally meaningless. For example, a company selling luxury goods may often have a high profit percentage on its wares, while having a low inventory and relatively low overhead, earning modest revenue while maintaining a high profit margin. A consumer staples producer, on the other hand, may have a low profit percentage while having a high inventory and a relatively high overhead, due to a need for a larger work force and more space. The consumer staples company, then, could have very high revenue while having a relatively low profit margin.

Profit margin is also not very useful when considering companies that are losing money, since they have no profit.



-- Variations of 'Profit Margin':

There are a few variations on profit margin that investors and analysts use to measure more (or less) specific elements of a company’s profit.

One such variation is gross profit margin, which divides gross profit (revenue minus the cost of goods sold including labor, materials and overhead) by revenue earned. This variation comes with certain limitations, such as that management may often have little control over the cost of materials. In this case gross profit margin is less useful for determining management quality. In addition industries with no production process have no or little cost of sales. Gross profit margin is most useful when considering companies that actually produce goods.

One particularly popular variation of profit margin is operating profit margin, which divides operating profit (revenue minus selling, general and administrative expenses) by revenue.

Investors and analysts may often use pretax profit margin, which divides pretax earnings (revenue without deducting tax costs) by revenue.



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Your Friend in Liberty, Barry.  

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### Trading Candle Cheat Sheet: 

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![](https://steemitimages.com/DQmNt9DMeZvh8LbWJpR2RAnTA11e51A9W2EB5xuv2cpuYQu/image.png)


###### [Further Reading/Source/Resources](https://www.investopedia.com)


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### Friend of the People -- Enemy of the State. 

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https://i.imgur.com/iHrKXYo.jpg

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## Bitshares 101 Focus/Resources Section: 

#### for New Crypto Folks. 

##### https://bitshares.org/

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![](https://steemitimages.com/DQmbue1DC4HAwzemUCBXLHdJcCg9jS1aTM8MWS2GNbvFX7b/image.png)

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-- Bitshares is a Trading platform, and a LOT more.... designed by blockchain wizard here Dan Larimer - @dan / @dantheman.

I've blogged on him, and BTS many many times.  

It's a place you can use that is decentralized, with an active community, to use trading lessons like this, that we are learning together.  


#### Just a few of my past $BTS blogs....

##### to help you apply lessons today!

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https://steemit.com/bitshares/@barrydutton/crypto-101-series-stan-larimer-the-godfather-of-bitshares-and-father-of-blockchain-liberty-genius-dan-larimer-interview-recently

https://steemit.com/bitshares/@barrydutton/will-blockchain-guru-dan-larimer-be-called-in-to-save-ethereum-as-crypto-kitties-grinds-eth-chain-to-a-halt-the-irony

https://steemit.com/cryptocurrency/@barrydutton/dan-larimer-video-interview-on-epicenter-recently-this-is-a-must-watch-listen-an-in-depth-look-chat-about-his-past-crypto-life

https://steemit.com/steemit/@barrydutton/dan-larimer-community-musical-tribute-post-a-music-video-to-say-thanks-and-best-wishes-to-our-steemit-co-founder

https://steemkr.com/bitshares/@barrydutton/so-tether-project-was-hacked-another-use-case-for-bitshares-and-dan-larimer-blockchain-genius-which-remains-undervalued-and


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Thanks for reading, have a nice day.      

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###### PixaBay has tons of free pictures for us all to use!!!     

###### Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/    



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#### If you liked this blog post - please Resteem it and share good content with others!

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### Some of my recent blogs: 

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https://steemit.com/gold/@barrydutton/5uhsnp-steemit-gold-silver-report-gold-equities-are-insanely-priced-chairman-of-goldmining-inc-amir-adnani-video-6-mins

https://steemit.com/crypto-news/@barrydutton/2kgdyq-shapeshift-crypto-exchange-service-partners-with-mycrypto-online-wallet-the-direct-open-source-wallet-for-the-ethereum

https://steemit.com/steem/@barrydutton/steemit-global-alexa-ranking-update-steemit-continues-the-climb-to-1-website-global-ranking-or-3-20-2018

https://steemit.com/money/@barrydutton/liberty-by-the-numbers-16-or-crypto-market-cap-still-worth-nearly-what-bankster-jamie-dimon-s-jp-morgan-chase-is-or-this-regular





Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay.  Today: 

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##### Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone.  I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.   

###### This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.

###### I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.                                                          

###### Carry On.                                                                                            

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@maanabdullah ·
Amazing informatic post. Really appriciate your working about crypto trading candles . you are great. Follow you to hear again. Q
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