Net Profit Margin Formula
Net profit margin shows what percentage of revenue turns into actual profit after ALL expenses. It's the bottom line of business profitability.
Net Profit Margin
Net Profit Margin = (Net Profit / Total Revenue) × 100
Where:
- Net Profit = Revenue minus ALL expenses (including tax)
- Revenue = Total sales/income
Step-by-Step:
- 1
Calculate net profit
Revenue - COGS - Operating Expenses - Interest - Taxes.
- 2
Divide by revenue
Net Profit / Revenue.
- 3
Multiply by 100
Convert to percentage.
Worked Examples:
Business
Revenue: ₹50,00,000Net Profit: ₹5,00,000
Result: 10%
Margin = (500000/5000000) × 100 = 10%