Profit Margins Made Simple: A Beginner’s Guide

Hey all,

According to Professor Damodaran, the biggest drivers of valuation entail two parts: revenues and margins.

But what do we know about margins, and how do we go about analyzing them?

Today, we are going to look at a few ways:

• Gross Margins

• Operating Margins

• Net Income Margins

• Free Cash Flow Margins

• Cash Conversion Ratio

These infographics will give you some ideas on how to analyze a companies margins along with what to look for, good and bad.

Gross Margins

Operating Margins

Net Income Margins

Free Cash Flow Margins

Cash Conversion Ratio

That will wrap it up for today, hope you found some value here. If you have any questions, please don’t hesitate to reach out.

Take care,

Dave