How is profit margin typically defined?

Profit margin is defined as net income divided by revenues. This financial metric indicates how much profit a company makes for every dollar of revenue. By expressing net income as a percentage of revenues, profit margin provides insight into a company's overall profitability and operational efficiency. A higher profit margin implies that the company retains more profit on each dollar of sales, which is generally viewed as favorable for stakeholders.

In contrast, other options such as revenue minus total expenses describe total profit rather than margin, and net income divided by total assets reflects return on assets rather than profit margin. Also, total sales divided by operating expenses does not pertain to the definition of profit margin, as it contrasts revenue with costs rather than measuring how much income is generated from sales. Thus, the correct choice clearly defines profit margin in a way that accurately reflects its purpose in financial analysis.