<p>Yes it is possibile.
For example:</p>
<blockquote>
<p><strong>Company A</strong>: Gross Margin: 50% , Operating Margin: 40%, Profit Margin: 25%</p>
</blockquote>
<blockquote>
<p><strong>Company B</strong>: Gross Margin: 80%, Operating Margin: 20%, Profit Margin: 10%</p>
</blockquote>
<p>A situation like the one I describe is definitely possibile. Company B has a lower Cost of Revenue but it has higher operating expenses which decrease operating and profit margins.<br />
You need to know the business model and analyze the financial statements to understand why it is so.</p>

CC BY-SA 4.0
2022-06-21T16:41:26.403Z
2022-06-21T16:41:53.890Z
2022-06-21T16:41:53.890Z
Emanuele
<p>If we compared the profitability ratio between two firms, for example Company A and B. Under profitability ratio, we need to calculate net profit margin, operating profit margin and gross profit margin
.So,if i get the net profit margin and operating profit margin for company A is higher than company B but Gross profit margin get lower than company B. It is possible? Or if one indicator higher, all the 3 need to be higher too. Can you explain more about this situation because i want to know which company doing better.thankyou so much if you want to help me.</p>

CC BY-SA 4.0
2022-06-21T05:31:27.063Z
Please clarify your specific problem or provide additional details to highlight exactly what you need. As it's currently written, it's hard to tell exactly what you're asking.
Giskard
CC BY-SA 4.0
2022-06-21T11:25:06.113Z
Your question appears to relate more to accounting than to economics, so is probably off topic here (and although Stack Exchange has sites for many topics it doesn't have one for accounting.  However, you may find helpful information [here](https://www.investopedia.com/ask/answers/010815/what-difference-between-gross-profit-margin-and-operating-profit-margin.asp) and [here](https://www.investopedia.com/ask/answers/101314/what-are-differences-between-gross-profit-and-net-income.asp).
Adam Bailey
<financial>
Profitability ratio
Adib
# Profitability ratio

(Asked by: username_0 on 2022-06-21)

If we compared the profitability ratio between two firms, for example Company A and B. Under profitability ratio, we need to calculate net profit margin, operating profit margin and gross profit margin
.So,if i get the net profit margin and operating profit margin for company A is higher than company B but Gross profit margin get lower than company B. It is possible? Or if one indicator higher, all the 3 need to be higher too. Can you explain more about this situation because i want to know which company doing better.thankyou so much if you want to help me.

**Tags:** financial

> **Comments:**
> **username_1**: Please clarify your specific problem or provide additional details to highlight exactly what you need. As it's currently written, it's hard to tell exactly what you're asking.  
> **username_2**: Your question appears to relate more to accounting than to economics, so is probably off topic here (and although Stack Exchange has sites for many topics it doesn't have one for accounting.  However, you may find helpful information [here](https://www.investopedia.com/ask/answers/010815/what-difference-between-gross-profit-margin-and-operating-profit-margin.asp) and [here](https://www.investopedia.com/ask/answers/101314/what-are-differences-between-gross-profit-and-net-income.asp).  

---

## 1 answers

### Answer by username_3 on 2022-06-21. Score: 1

Yes it is possibile.
For example:

> **Company A**: Gross Margin: 50% , Operating Margin: 40%, Profit Margin: 25%

> **Company B**: Gross Margin: 80%, Operating Margin: 20%, Profit Margin: 10%

A situation like the one I describe is definitely possibile. Company B has a lower Cost of Revenue but it has higher operating expenses which decrease operating and profit margins.  
You need to know the business model and analyze the financial statements to understand why it is so.


---

