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When valuing a company, you often hear people ask, How much does it cost to make this product, and how much does it sell for"? Depending on the answer, it's then determined to have a good or bad margin

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When valuing a company, you often hear people ask, How much does it cost to make this product, and how much does it sell for"? Depending on the answer, it's then determined to have a good or bad margin. What does this mean? Is this a profitability ratio? Also, what would be a good margin?