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.

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.

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.

Gross margin focuses on revenue and COGS, unlike the net profit margin, which takes all of a business's expenses into account. Investopedia / Tara Anand Formula and Calculation of Gross Margin ...

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%.

Columnist John D. Wagner explains why gross profit margin should not rise or fall with sales and reasons that it could.

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 ...

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.