Net Profit Margin Calculator
Calculate the profitability ratio that measures net income relative to total revenue
Calculate Net Profit Margin
Net profit after all expenses, taxes, and interest
Total sales revenue before any deductions
Net Profit Margin Results
Formula used: Net Profit Margin = (Net Profit ÷ Total Revenue) × 100
Profit per dollar of revenue: $0
Performance: Below Average - Low profit margin. The company may need to improve efficiency or reduce costs.
Performance Analysis
Industry Benchmarks
Technology
Average: 15-25%
High-margin software companies
Retail
Average: 2-6%
Traditional retail businesses
Manufacturing
Average: 3-8%
Industrial and consumer goods
Quick Tips
Example Calculations
High-Profit Company
Total Revenue: $1,000,000
Net Profit: $200,000
Net Profit Margin: 20%
Low-Margin Company
Total Revenue: $1,000,000
Net Profit: $30,000
Net Profit Margin: 3%
Related Calculators
Gross Margin Calculator
Calculate gross profit margins
EBITDA Calculator
Calculate earnings before interest, taxes, depreciation & amortization
Return on Equity Calculator
Measure profitability and efficiency
Return on Assets Calculator
Measure asset efficiency and profitability
Current Ratio Calculator
Measure company liquidity and solvency
Break-even Calculator
Calculate break-even point for business
Understanding Net Profit Margin
What is Net Profit Margin?
Net profit margin is a profitability ratio that measures how much net income a company generates relative to its total revenue. It shows the percentage of revenue that remains as profit after all expenses, taxes, and interest have been deducted.
Why is it Important?
- Measures overall profitability and efficiency
- Helps compare companies within the same industry
- Indicates financial health and sustainability
- Useful for investors and stakeholders
- Tracks performance trends over time
Factors Affecting Net Profit Margin
- Cost of goods sold (COGS)
- Operating expenses
- Interest expenses
- Tax rates
- Industry competition
- Economic conditions
Improving Net Profit Margin
- Increase revenue through better pricing or sales volume
- Reduce cost of goods sold
- Lower operating expenses
- Improve operational efficiency
- Optimize tax strategies
- Reduce interest expenses