What term describes the percentage by which profits from sales exceed revenues?

The term that describes the percentage by which profits from sales exceed revenues is known as the profit margin percentage. This metric is critical for understanding a company's profitability in relation to its sales. It indicates how much of each dollar earned translates into profit after accounting for expenses.

A higher profit margin percentage suggests that a company is effectively managing its costs relative to its sales, resulting in greater profitability. This is particularly important for assessing overall business health and operational efficiency. Analysts and investors often look at this ratio to gauge a company's ability to generate profit from its sales, making it a key performance indicator in the retail industry.

Gross margin percentage focuses specifically on the relationship between sales and the cost of goods sold, while net profit rate considers all expenses, including operating and non-operating costs, impacting the final profitability figure. Return on investment measures the return relative to the investment made, emphasizing efficiency in using resources rather than direct profitability from sales. Thus, profit margin percentage is the most relevant term for the context of sales and profits.