The profit margin.

These high profit percentages occur due to several factors: product shortages, monopoly prices and the absence of a regulatory mechanism where supply and demand function correctly.

A few days ago I published a post on the surplus and pointed out that when there is inflation this indicator can distort reality, now I am going to refer to the profit of companies.

The profit margin depends on the sector where it operates, although as a general rule there are indicators that illustrate it. The average, for example, 5 percent, is low; 10 percent is average and 20 percent is considered good.

These digits are nothing like the profit margin of our economy, both state and private, where profit rates are over 100 percent and even 200.

According to economic experts, a net profit margin of 10 percent is considered average, 20 percent is considered good and 5 percent is considered low. But it should be noted that what is considered a good profit margin varies widely by industry. Generally speaking, a profit margin of 10- 20 percent is considered healthy.

Experts often say that a business needs a profit margin of at least 5 percent to maintain growth, but this does not mean that all products have to have this margin.

Empirically I state that in our Economy a 5 percent margin is laughable, but one of 100 or 200, as occurs in many cases, is abusive to the consumer. These high percentages of profit occur due to several factors, among them, the scarcity of products, monopoly prices -I will refer to the latter at another time-, and especially the lack of a natural regulatory mechanism, where supply and demand function correctly.

Enrique Tirse.