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Net Margin

Net Margin

What is Net Margin?

Net margin is a profitability ratio calculated by dividing net income by revenue. It expresses the percentage of profit generated from sales after deducting all expenses.

Net margin, also known as net profit margin, is a key financial metric used to assess the profitability of a business. It represents the percentage of revenue that remains as profit after accounting for all expenses, including operating costs, taxes, interest, and depreciation. Net margin is a critical indicator of a company's financial health and efficiency in converting sales into profit.

Understanding Net Margin:

Net margin is calculated by dividing net profit by total revenue and multiplying by 100 to express it as a percentage. It measures the portion of revenue that translates into profit after deducting all expenses. A higher net margin indicates better profitability and efficiency in managing costs.

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