Articles on Stock markets

News, Research and Analysis

Help Center
Investment Portfolios
Investment Terminology and Instruments
Technical Analysis and Trading
Cryptocurrencies and Blockchain
Retirement Accounts
Personal Finance
Corporate BasicsBasicsCorporate StructureCorporate FundamentalsCorporate DebtRisksEconomicsCorporate AccountingDividendsEarnings

What is the Contribution Margin Ratio?

The contribution margin ratio presents a profit (less variable expenses) as a percentage of net sales.

For an individual product, the contribution margin ratio would look at that product’s contribution margin ratio as a percentage of the profit made on that sale. The higher the contribution margin ratio, the better.

A low contribution margin ratio would indicate that a company would have a difficult time creating a substantial profit from the sale of that product over time.

Keywords: profits, margin, variable costs, contribution margin, contribution margin ratio, net sales,