One type of profit margin is a company's gross profit margin, which is its gross profit divided by its revenues. It gives a pretty good indication of a company's pricing power versus its product costs. Here we saw that Coke has a gross profit margin of 64% , indicating people are willing to pay quite a bit more for Coke's products than it costs Coke to produce them.
For comparison purposes, here are the gross profit margins for several industries in 2005:
Note that profit margins are not the be-all end-all when it comes to profitability as they don't consider asset utilization. A company able to generate revenue and income on fewer assets is preferable to one that constantly needs capital infusions to grow.
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