Profit margin is a financial metric used to assess a company's financial health by calculating the percentage of revenue that exceeds the company's costs and expenses. In simpler terms, it shows what percentage of sales has turned into profits.
To calculate profit margin in Google Sheets, you can use the following formula:
=(Revenue - Cost) / Revenue
Follow the steps below to calculate profit margin in Google Sheets.
Enter your Revenue and Cost data into two separate columns in Google Sheets. For this dataset, you might label the first column "Product", the second column "Revenue ($)", and the third column "Cost ($)".
Click on the cell right next to the first row of your data (for example, D2, if your data starts at row 2) where you want the profit margin result to appear.
Type the formula to calculate the profit margin based on your Revenue and Cost. Given your Revenue is in column B and your Cost is in column C, for the first product (Product A in row 2), the formula in cell D2 would be =(B2 - C2) / B2.
After typing the formula, press Enter. Cell D2 will display the profit margin for Product A as a decimal. To see this as a percentage, move to the next step.
With cell D2 still selected, go to Format > Number > Percent in the Google Sheets menu. This will convert the decimal in cell D2 to a percentage.
To calculate the profit margin for Products B through J, drag the fill handle (the small square at the bottom right corner of cell D2) down through cell D11. Google Sheets will automatically adjust the formula for each product.
Examine the calculated profit margins in column D for each product. These percentages reveal the portion of revenue that is profit for each product.
We hope that you now have a better understanding of how to calculate profit margin in Google Sheets. If you enjoyed this article, you might also like our article on how to use the Google Sheets inflation formula or our article on how to create a commission tracker in Google Sheets.
