Determining whether or not your business is profitable is an exercise you should conduct frequently. It’s not only important for you to understand the financial health of your business, but this information may come in handy when you’re looking for investors or want to take out a loan. After all, companies with high profit margins are considered a much safer bet among lenders and creditors than those with lower profit margins.
But in order to demonstrate profitability, you’ll have to do a bit of math . Don’t worry — it’s nothing too complicated. If you want to know how your company is doing financially, one of the best things you can do is to keep tabs on your profit margin by regularly running a profit margin analysis. Here, we’ll explain just what goes into calculating your profit margin, and how you can use the results to guide your business decisions for a prosperous future.