The profit margin formula in Excel is a simple calculation that helps you determine the percentage of profit generated from sales revenue. It’s a valuable financial metric for assessing a company’s profitability. The formula for calculating profit margin is:

Profit Margin = Net Profit / Total Revenue * 100

Where:

• Net Profit is the total profit after subtracting all expenses, including cost of goods sold (COGS) and operating expenses.
• Total Revenue is the total amount of money generated from sales or revenue.

Using the Formula in Excel

To calculate profit margin percentage in Excel, prepare your sales data first. Typically, you will have a column for Total Revenue and another column for Net Profit.

In an empty cell where you want to display the profit margin percentage, enter the following formula, replacing the cell references with the actual cells containing your data:

=(Net_Profit_Cell / Total_Revenue_Cell) * 100

For example, if your Net Profit is in cell A1 and Total Revenue is in cell A2, you would use:

=(A1 / A2) * 100

Format the result as a percentage. To do this, select the cell with your formula, right-click, and choose Format Cells. Select the Percentage category and set the desired number of decimal places.

That’s it! Your profit margin formula in Excel is now ready to use and will calculate your profit margin percentage automatically based on your financial data. This percentage represents the portion of total revenue that is profit after expenses. It’s a useful metric for evaluating a company’s financialafter expenses. It’s a useful metric for evaluating a company’s financial health and profitability.

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