If you like what we do here, please click on our sponsor's banner. This ratio should be checked for the last five years . This is a powerful ratio and one of the most important ones to look at . This ratio tells you how well the company makes money. The higher this ratio is , the better we like it .
Some industries have very low profit margin but show a stable growth as the grocery chains .
Other industries have a high profit margin but revenues could be very volatile as the semiconductor industry. When picking a stock , looking at the profit margin is an important point , but don't just look at the profit margin of the stock. Look at the industry info as well. Quick ratio Cash is the King and this ratio can tell you how well the company can meet short term operating needs . Ideally is a ratio of 1.0 or greater .