Net Profit Margin Calculator
Calculate net profit margin: the percentage of revenue left as profit after all expenses, interest and taxes.
Last updated: October 2026
Net profit margin
12 %
This calculator gives an estimate for general information only. It is not financial, tax or investment advice. Check the figures with a qualified professional before making decisions, and follow the rules that apply where you live.
Formula below · 1 source (finra.org) · Updated Oct 2026
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About this calculator
Net profit margin shows how much of each dollar of sales a business keeps as profit after paying for everything: the cost of the goods it sold, operating expenses, interest and taxes.
The formula
Net profit margin = net income ÷ revenue × 100. A company with $100,000 of revenue and $25,000 of net income has a 25% net margin: it keeps 25 cents of every sales dollar.
Where the numbers come from
FINRA describes net income as what remains when total expenses, such as cost of goods sold, general and administrative expenses, interest paid on debt and taxes, are subtracted from total sales, or revenue. Both figures are on the income statement; use the same period for both, such as a quarter or a year. Use net revenue (after returns and discounts) if the statement shows both.
Net, operating and gross margin
Gross margin subtracts only the cost of goods sold. Operating margin, which FINRA defines as operating income (EBIT) divided by revenue, also subtracts operating expenses but stops before interest and taxes. Net margin subtracts everything, so it is affected by how a company is financed and taxed, and by one-time gains or charges. Comparing all three shows where the money goes.
Comparing businesses
Margins vary enormously by industry. Grocers and other high-volume retailers often run on thin net margins, while software companies can keep a much larger share. Compare a business with its own history and with similar companies, and look at the dollar profit too: a thin margin on large revenue can still be a lot of money. A negative margin means a loss.
| Margin | Formula | What it subtracts from revenue |
|---|---|---|
| Gross margin | Gross profit ÷ revenue | Cost of goods sold |
| Operating margin | Operating income (EBIT) ÷ revenue | Cost of goods sold and operating expenses |
| Net profit margin | Net income ÷ revenue | All expenses, including interest and taxes |
How to use
Enter net income (the bottom line of the income statement) and total revenue for the same period. The defaults, $12,000 of net income on $100,000 of revenue, give a 12% margin. A restaurant with $1.2 million of sales and $54,000 of net income has a 4.5% margin. Enter a loss as a negative net income. The chart below splits revenue into net income and everything else (expenses, interest and taxes).
Frequently asked questions
How do you calculate net profit margin?
Divide net income by revenue and multiply by 100. $25,000 of net income on $100,000 of revenue is a 25% net profit margin.
What is the difference between gross and net profit margin?
Gross margin subtracts only the direct cost of the goods or services sold. Net margin also subtracts operating expenses, interest and taxes, so it is always lower than or equal to gross margin.
What is a good net profit margin?
It depends on the industry. Compare with similar businesses and with the company's own past results. Low-margin, high-volume businesses can be healthy, and a high margin on tiny revenue may not be.
Can net profit margin be negative?
Yes. If expenses, interest and taxes exceed revenue, net income is negative and so is the margin. Young companies investing for growth often run at a loss for a while.
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