One of the important things a business student has to learn early on in his career is that profit margins are NOT of extreme importance...at least not all the time.
I was reminded of that this morning when reviewing a presentation my friend was preparing for some executives from a major corporation (no need to say which one). He said that the company's stores should switch from selling a low-margin product to a high-margin product, simply because of the margin.
But, intuitively, we all see something wrong with that. Namely, that low-margin products might sell faster, giving us more money in the long-run.
That's why we shouldn't look just at profit margins when we're determining how valuable a firm is. Otherwise, restaurants and supermarkets would be considered bad investments.
A much better measure is return on equity or return on assets, which shows how much money a company makes for every dollar of investment it has.
That's my thought on "profit" for today