Free online net profit margin calculator – Calculate your net profit margin with ease using our online calculator. Simply input net profit and total revenue and then click the calculate button.
What is Net Profit Margin?
Net profit margin is a ratio that measures the percentage of revenue that a company retains as profit after all expenses have been deducted. It is an important financial metric that investors, analysts, and business owners use to evaluate the financial performance of a company.
Net Profit Margin Formula
Net profit Margin = (Net profit / Total Revenue)/100
Where:
Net Profit = Revenue – Cost of Goods Sold – Operating Expenses – Taxes and Interest
Total Revenue = Total sales or revenue generated by the company
How to Calculate Net Profit Margin
Example:- If a Company’s Net Profit is $20000 and Total Revenue is $360000 in the first quarter then calculate the net profit margin.
Net Profit Margin = (Net Profit / total revenue) * 100 = (20000/360000) * 100 = 5.55%
Net profit margin is 5.55% in the first quarter of the company
Importance of Net Profit Margin
Net profit margin is a critical financial metric that helps investors, analysts, and business owners understand the financial health of a company.
High net profit margin:- it indicates that a company is able to generate a significant amount of profit from its revenue, which is a positive sign for investors and owners.
Low net profit margin:- it indicates that a company is struggling to generate profit from its revenue and may need to make changes to its operations or pricing strategies.