Free Net Profit Margin Calculator
Calculate net profit margin to determine what percentage of revenue becomes actual bottom-line profit after all expenses.
Net Profit Margin
12.00%
Net Profit Margin vs Total Revenue
How to Calculate Net Profit Margin
Formula
Net Profit Margin = (Net Income / Revenue) x 100
Net profit margin is the ultimate bottom-line measure. It accounts for every cost the business incurs: cost of goods, operating expenses, interest, taxes, depreciation, and one-time charges. Tracking this metric over time reveals whether the company is converting an increasing share of revenue into profit.
Example Calculation
A company generated $1,000,000 in revenue and $120,000 in net income.
- 01Net Profit Margin = ($120,000 / $1,000,000) x 100 = 12%
- 02Total Expenses = $1,000,000 - $120,000 = $880,000
- 03Expense Ratio = $880,000 / $1,000,000 x 100 = 88%
Frequently Asked Questions
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How to Calculate Profit Margin
Learn how to calculate gross, operating, and net profit margins step by step. Understand what healthy margins look like across industries and how to improve yours.