00:01
So just to insult your intelligence, remember that profit is revenue minus costs.
00:05
Profit margin or what you might want to think of as profit percentage is profit over revenue, right? it's how much profit you make relative to your revenue.
00:14
It's the extra margin, the margin of area you have in your business model relative to your revenue, right? so if your profit was a million dollars, it's very different whether you made, you had a revenue of $2 million and had a profit of a million versus you had a revenue of a billion dollars in a profit of a million.
00:36
So a profit margin is telling you about how much of your revenue, right? if you can think of revenue, you can say, i want to split the revenue into costs and profit, right? and so this profit percentage down here tells you how much of your revenue is going to profit.
00:57
So of the total revenue, what percentage of it is going into profit, right? that's what profit margin is telling you.
01:07
So here we have for every $1 in net income, the company generates 0 .1 in net sales...