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Net profit margin is the bottom-line profitability metric — what share of revenue remains as actual profit after every expense, including interest and taxes, has been paid.
How it works
Enter net income and revenue, and the calculator applies Net Profit Margin = (Net Income ÷ Revenue) × 100.
- Enter net income ($).
- Enter revenue ($).
- Click Calculate to see your results.
Examples
A modest but real profit margin
A company with $80,000 of net income on $1,000,000 of revenue has a net profit margin of 8% — for every revenue dollar, 8 cents remains as final profit.
Who should use it
- Comparing overall profitability across companies or periods.
- Investment analysis and equity research.
Industry applications
- Corporate finance and financial analysis
- Investment analysis and equity research
Advantages
- The single most complete bottom-line profitability figure.
- Easy to calculate from figures already on an income statement.
Limitations
- Can be affected by one-off items (like a one-time asset sale or write-off) that don't reflect ongoing business performance.
Common mistakes to avoid
- Comparing net profit margins across very different industries without accounting for typical margin-level differences.
- Confusing net profit margin with gross or operating margin — each stops at a different point in the income statement.
Best practices
- Compare net profit margin against similar companies in the same industry, not as an absolute universal benchmark.
- Track the trend over multiple periods rather than judging a single period alone.
Tips
- If net profit margin looks unusual for one period, check operating margin and EBITDA margin too — comparing all three can reveal whether the change is from core operations or a one-off item further down the income statement.