Profit Margin

Profit (less taxes) divided by revenues equals profit margin. It is always portrayed as a percentage. If our revenues (all incomes) equal $100,000 and our Profit & Loss statement shows net profit of $15,000, our profit margin is 15%. It turns out that's a great profit margin.

Breweries average a profit margin of over 25% while drug manufacturers operate for a 16.% profit. Other examples: Railroads 12.9%, Wireless Communications 11.7%, Oil/Gas Drilling 9.7%, Medical Research Labs 8.2%, Periodical publishers 5.2%, Hospitals 3.6%, Heavy Construction 3.3%.

Also aiming for 3.3% profit margin are Health Care Plans such as Cigna and Aetna.

Health care insurance companies usually hit less than 4% profit margins. Those greedy companies.

These figures are from Yahoo Finance. I found them eye opening. I would have guessed heavy construction and hospitals to have higher profits. I think the lower the profit margin percent, the higher the risk from the viewpoint of an investor.

'til later