Contribution Margin Ratio Formula, Calculation, and Example
Mastering these financial concepts is essential for today’s business leaders. These tools help managers navigate the complexities of modern business, driving sales, profitability and sustainable growth. Very low or negative contribution margin values indicate economically nonviable products whose manufacturing and sales eat up a large portion of the revenues. Investors examine contribution margins to determine if a company is using its revenue effectively. A high contribution margin indicates that a company tends to bring in more money than it spends. A...
