Net profit margin is a key financial metric that measures the percentage of revenue left as profit after all expenses are deducted. Investors and businesses can use the net profit margin to assess ...

A firm’s net profit margin is a key indicator of its profitability. Analyzing it can tell potential investors whether the business may be a good bet.

Formula for a Net Profit Margin. The net profit of a business is the difference between its gross, or total, profit and its total expenses, including overhead, interest payments and taxes.

Here's the formula for net profit margin: Net Profit Margin Formula. Let's say a company generates $1 billion of revenue and $225 million of net income during a reporting period.

The most comprehensive of the three is net profit margin, which factors in every expense. Subtract all expenses — including taxes and interest — from total revenue, then divide by total revenue.

A 2015 report put the average gross profit margin for companies with market capitalization exceeding $1 billion at 42%, operating margin 13% to 14%, and net profit margin 7%. Having a margin at or ...

For example, if your revenue is $100,000, and your expenses are $60,000, your net profit margin would be (100,000 - 60,000)/100,000, resulting in a net profit margin of 40%.

Here’s a more detailed look at the net profit margin formula: Net profit margin = net income (revenue – cost of goods sold – operating expenses – interest – taxes – other expenses ...

Divide the net income ($35,000) by the total sales ($200,000) and the business has a profit margin of 17.5 percent ($35,000 / $200,000 = 0.175). Advertisement Article continues below this ad ...

Net Profit Margin = (Net Profit / Revenue) x 100. To calculate the net profit margin, divide the net profit by total revenue and multiply by 100 to express the value as a percentage.