How to calculate net profit margin?

[niyati]

I’m trying to understand how to calculate the net profit margin for a business. Could someone explain the formula and what numbers I need from the financial statements? Also, how do you interpret the net profit margin — what does a high or low margin indicate about a company’s performance? Any simple examples or tips would be really helpful. Thanks!

 

[Shane Warne]

Net profit margin = (Net Profit ÷ Revenue) × 100.
It shows how much profit a company makes for every dollar of revenue. For example, if net profit is $20,000 and revenue is $100,000, the margin is 20%. Higher margins indicate better profitability.

 

[alenaghose]

To calculate net profit margin, use this formula:
Net Profit Margin = (Net Profit ÷ Revenue) × 100
Where:

• Net Profit = Total revenue minus all expenses (including taxes and costs)
• Revenue = Total sales or income

This percentage shows how much profit a company makes from its sales.

 

[brook]

To calculate net profit margin, use this formula:
Net Profit Margin (%) = (Net Profit ÷ Revenue) × 100

Example:​

If your revenue is ₹1,00,000 and net profit is ₹20,000:
(₹20,000 ÷ ₹1,00,000) × 100 = 20%
This means your net profit margin is 20%.

 

[Gsusangrey]

Net profit margin is calculated by dividing net profit by total revenue, then multiplying by 100. Formula:

Net Profit Margin (%) = (Net Profit/Revenue) x 100

It measures profitability after all expenses.

 

[Mayank]

To calculate net profit margin, divide net profit by total revenue and multiply by 100. The formula is: (Net Profit ÷ Revenue) × 100. It shows how much profit a company makes per rupee earned.