Gross profit margin can turn negative when the costs of production exceed total sales. A negative margin can be an indication of a company's inability to control costs.

Is profit negative or positive?

Accounting profit = total revenue – explicit costs. Economic profit can be positive, negative, or zero. If economic profit is positive, there is incentive for firms to enter the market. If profit is negative, there is incentive for firms to exit the market.

What does it mean when profit is negative?

Net profit margin is the percentage by which a company's total revenue exceeds, or is less than, its overall expenses. A positive net profit margin demonstrates that the company is running in profit, whereas a negative ratio indicates that the company is making less money than it is spending.