Learn / Fundamentals / Profitability / Margins
Margin = Profit ÷ Revenue
A margin answers one question: of every sales dollar, how many cents are left after costs? Gross, operating, and net are three stops along that path.
01 Feel it first
Start with $1.00 of sales. Click each cost layer to peel it off — first the cost of goods, then operating costs, then interest and tax — and watch how much of the dollar is left.
02 Break the intuition
Software at 80% gross and a grocer at 25% gross can both end near 10% net. Where the money leaks is the whole story.
03 Sort it
Same net margin can come from totally different cost machines. Sort each business into where most of the sales dollar gets lost.
Tap a business, then pick where its margin mostly leaks.
Tap a card, then tap a bucket.
04 Scrub the scale
Drag the net margin slider. The same percentage can look thin or excellent depending on the industry.
Net margin is thin for software and excellent for an airline at the same percentage. Always compare inside the same peer group.
05 Two flavors
Same sales, different profit story. GAAP is the audited number. Adjusted is management’s cleaned-up version.
06 The catch
A 10% net margin is thin for software and excellent for an airline. Always compare inside the same peer group.
07 Check yourself
08 Where it breaks
A single big gain or charge can spike or crush a year’s margin without changing how the business usually works.
Selling more of a low-margin product can drop the company margin even if each product is fine on its own.
A fat margin on a tiny investment is different from a fat margin that required a huge factory. Pair margins with ROIC and free cash flow.
Leases, stock pay, and revenue rules can differ. Raw margin comparisons across firms get slippery fast.
Open any ticker for gross, operating, and net margin with history — then screen peers by profitability.
Click a cost layer to see how much of each sales dollar survives.