Net Profit Margin Calculator
The ultimate 'bottom line' metric. This tool reveals how much of your total sales actually stays in your pocket after every single business expense has been paid.
What is net profit margin?
Net profit margin is a financial ratio used to calculate the percentage of profit a company produces from its total revenue. It is one of the most important indicators of a company's overall financial health.
How is net profit margin calculated?
The formula is: (Net Profit / Total Revenue) × 100. Net profit is the amount remaining after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from a company's total revenue.
What is the difference between gross margin and net margin?
Gross margin only accounts for the cost of goods sold (COGS). Net margin accounts for ALL costs, including overhead, interest, and taxes. Net margin is always lower than gross margin.
Why do net profit margins vary by industry?
Different industries have different cost structures. For example, software companies often have high net margins because their production costs are low, while grocery stores have low margins but high sales volume.