Factors Influencing a Company's Profit Margin

Explanation

A company's profit margin is determined by many factors like its competitive strategy, the degree of monopoly it enjoys, the relative dependency on external factors versus internally generated performance, etc. However, while the risks involved in the cash flows are relevant considerations in determining the total level of earnings of a firm, they do not affect the percentage of the sales which translate into profits i.e. the profit margin. Of course, higher risks can and do lower the return on capital.