Formula - Profit Margin | Propertylogy

Formula – Profit Margin

By on August 5, 2018

PM = C/I

Where:

PM – Profit margin

C – Cash flow

I – Gross income

The profit margin formula is used to measure the strength of cash flow.

The results are useful in comparing between different income properties to evaluate which would make a better investment.

Other than comparing against a specific property, it can also be put against the market average to judge whether it is performing above or below the market.

Just because a specific property loses out to another doesn’t mean that it’s a loser. If it is performing above the market, this factor can still make it a good investment.



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