This should also be factored in an investors analysis. The company's expenditures should also be analyzed. For companies that produce goods for resell, the cost of sales item should be used to determine the attractiveness of the company's margins. Companies that have revenue that is slightly higher than cost of sales are said to have slim margins. Companies with slim margins are not as attractive as companies with wider margins because the ability to earn a high profit from revenue is reduced.
Investors can also include other variable costs in their analysis of margins.
Investors should also compare the previous periods expenses with the current periods. Any deviations or one-time charges should be included in the analysis other investors. The aggregate change in revenues should also be compared to the change in aggregate expenses. Earnings are the most widely used figure by investors. Earnings are calculated on an after tax basis.