Profit Margin

Profit margin is a core indicator for measuring a company's profitability in foreign trade. It usually refers to the ratio of net profit to sales revenue, reflecting the profit generated per unit of sales. In foreign trade scenarios, profit margin is affected by multiple factors such as exchange rate fluctuations, tariffs, freight, tax rebates, commissions, and payment methods, so calculations must specify whether it is gross margin or net margin. Use cases include quotation decisions, cost accounting, customer negotiations, and performance evaluation. Notes: Under different trade terms (such as FOB, CIF), cost structures differ, and the profit margin base may change; tax rebate income is often included in profit and should be listed separately; unlike markup, profit margin uses selling price as the denominator, while markup uses cost as the denominator. Foreign trade practitioners should distinguish between 'target profit margin' and 'actual profit margin' and consider hidden costs such as capital occupation and bad debt risk.