Net margin calculator
- Formula
- Net income ÷ Revenue
Net margin = Net income ÷ RevenueA loss is a negative number.
Net margin
10.2%
How it’s worked out
- 1Net income ÷ revenue$610,000 ÷ $6,000,00010.2%
Runs in your browser; nothing you type is sent anywhere. Amounts in US dollars.
Worked on a real month of books
Northwind Traders, Inc., September 2026 (accrual basis, USD), the month the free course is taught on. Every figure is read off the course's posted ledger, not typed.
- 1Net income ÷ revenue$2,550 ÷ $31,5008.1%
See the statements these come from in the course.
How to read it
Net margin is the share of each dollar of revenue the company keeps after every cost, including interest and tax.
It is the bottom line expressed as a rate, which makes companies of different sizes comparable.
Common mistakes
- Using gross profit instead of net income.
- Comparing a quarter with one-off gains to a normal one.
Questions
- What is a good net margin?
- It varies widely by industry: low single digits for retail and distribution, much higher for mature software.
- Is net margin the same as profit margin?
- Yes. Net profit margin, profit margin and net margin are the same measure.
Read it with
The metrics read alongside this one, and the terms it is confused with.
- Gross margin vs net marginGross margin is revenue less only the cost of delivering it, as a share of revenue; net margin is what is left after every cost — operating expenses, interest and tax — as a share of revenue.Compare
- Operating margin calculatorOperating margin is a profitability metric, calculated as Operating income ÷ Revenue.Calculator
- Contribution margin calculatorContribution margin is a profitability metric, calculated as (Revenue − Variable costs) ÷ Revenue.Calculator
- EBITDA calculatorEBITDA is a profitability metric, calculated as Net income + interest + income taxes + D&A (≈ operating income + D&A with no other non-operating items).Calculator
- Net marginNet margin is a profitability metric, calculated as Net income ÷ Revenue.Term
The formula is the one the glossary states, and the arithmetic is unit-tested. A ratio with nothing to divide by shows a dash — undefined is not zero. General information, not financial advice.