Join Your Exam WhatsApp group to get regular news, updates & study materials HOW TO JOIN

# Difference between Margin and Profit

## Difference between Margin and Profit

If you are into business, you have to deal with many words and terms that are similar in meaning, and yet different from one another, as there are several ways to look at profit in a business. You have markup, profit, margin, gross profit, operating profit, net profit, and so on. But for now we shall confine ourselves to margin and profit that are two concepts enough to confuse a person who has just started out. Let us take a closer look.

Taking the above example again, we find that the fruit vendor made a profit of \$40 on an expense of \$100, which gives him a profit margin of 40%. In this specific case, both profit and margin happen to be same though, it needs to be clarified again that while profit is in absolute number (the currency that the businessman is dealing in), margin is always in terms of percentage.

To make the two concepts clear, take a look at the following example.

Suppose a roadside vendor purchases goods for \$80 and by the end of the day, he has sold everything, generating \$100 in sales. It is clear then that he has made a profit of \$20 in a day. As far as his margin is concerned, it is calculated as follows.

[(100 – \$80)/ \$100] X 100% = 20%

Generally, business where goods are sold in huge quantities keep low margins, while in businesses where products sell in small quantities, the profit margin is kept high.

### Difference Between Margin and Profit

• Profit is the amount of money in hand of a business man after selling his goods and deducting his expenses that include cost price of products

• Margin is the profit percentage over cost price.

Difference between Margin and Profit

At CAKART www.cakart.in you will get everything that you need to be successful in your CA CS CMA exam – India’s best faculty video classes (online or in pen drive) most popular books of best authors (ebooks hard copies) best scanners and all exam related information and notifications.Visit www.cakart.in and chat with our counsellors any time. We are happy to help you make successful in your exams.

.

www.cakart.in.