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.

 

[Samuel]

To calculate net profit margin, divide a company's net profit by total revenue and multiply by 100 to obtain a percentage. The formula is: Net Profit Margin = (Net Profit / Total Revenue) multiplied by 100. This indicator indicates how much of each dollar of revenue a company keeps as profit after all expenses, such as operating costs, interest, and taxes, have been deducted.

 

[danisjohn]

If you want to calculate Net Profit Margin, use this formula

Net Profit Margin = (Net Profit ÷ Revenue) × 100

Example:
If a company earns $200,000 in revenue and has $50,000 in net profit:
(50,000 ÷ 200,000) × 100 = 25% net profit margin.

 

[deepak]

To calculate net profit margin, divide your net profit by your total revenue. This ratio, usually stated as a percentage, indicates how much profit a company makes for every dollar of revenue. It is a significant indicator of a company's overall financial health and operational effectiveness.

 

[robertwilliam]

The Net Profit Margin formula goes as follows: (Net Profit/Total Revenue) x 100. This tells us what percentage of the revenue is left with a company as profit after all expenses, including operating costs, interest, and taxes, have been deducted from its total revenue.

 

[nikhilrajoria]

Formula:

Net Profit Margin
=
Net Profit
Revenue
×
100
Net Profit Margin
Revenue
Net Profit

×100

E.g., 100,000 revenue and 20,000 net profit = 20% Margin.