Profit margin is a financial metric that shows how much profit a company makes for every dollar of revenue. It is calculated by dividing net profit by total revenue and is usually expressed as a percentage. A higher profit margin indicates that a company is more efficient at converting sales into actual profit. There are different types of profit margins, including gross profit margin, operating profit margin, and net profit margin. Each type provides insights into different aspects of a company's profitability. Understanding profit margins helps investors and business owners assess financial health and operational efficiency.