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Bernard Baruch

Investment Dictionary

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Profitability Margins


Profitability margins are ratios that show how profitable company’s activity is. There may be many kinds of profitability margins. Normally profitability means some kind of profit divided by revenue. But also profitability of assets (ROA), profitability of equity (ROE) or investments (ROI) might be calculated. Such ratios as ROA and ROI show profitability, but they aren’t profitability margins.


Those are the most popular profitability margins: 

Gross margin (Gross profit / Revenue)

EBITDA margin (EBITDA / Revenue)

EBIT margin (EBIT / Revenue)

Pretax margin (Pretax profit / Revenue)

Net margin (net profit / Revenue)


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