Profit margin refers to the difference between a company's revenues and its expenses. It is an important measure of a company's financial health, as it indicates how much money is left over after all costs have been paid. A higher profit margin means that a company is making more money per dollar of sales, while a lower profit margin means that the company has less money left to work with after expenses are covered. Profit margins can vary greatly between industries and companies, depending on factors such as production costs, market competition, and pricing strategies.