What is the profit margin used to indicate?

The profit margin is a key financial metric that serves to indicate the relationship between a company's net income and its total revenue. Specifically, it expresses net income as a percentage of total revenue, providing insights into how much of the revenue generated by a business is actually retained as profit after all expenses have been deducted. A higher profit margin suggests that a business is more efficient at converting revenue into actual profit, while a lower margin may indicate higher costs or reduced efficiency. Understanding this relationship is essential for assessing a company's profitability and operational effectiveness.

Each of the other options does not precisely capture the concept of profit margin. Total revenue alone does not provide insights into profitability, while tracking overall expenses does not directly relate to the calculation of profit margin. Similarly, while cost control measures can influence profit margins, they are not what the profit margin specifically measures. Thus, the focus of the profit margin on the interplay between net income and revenue makes it a vital indicator of financial health and performance.