Use our net profit margin calculator to work out both net profit and percentage (%) profit margin.
Knowing how much profit your business makes is essential. The company may have great sales, but the business cannot survive if the cost of sales and expenditure eats up all the sales.
A high net profit margin means typically that your sales are calculated at around the right price. If the figure is low, it is worth spending some time reviewing both sales prices and overheads to see where improvements can be made.
This figure is generally calculated over a period of time, which can be a month, quarter or year.
Net Profit Margin Formula
Net Profit Example
An example is a business that has 10,000 sales in a year, the cost of sales (purchases of products for sale and other direct costs) is 1,500, there are also other general overheads (utilities, rent, wages and taxes) of 3,000. The Net profit is 10,000 minus 1,500 minus 3,000 giving a figure of 5,500.
Calculate Net Profit Margin
To calculate the net profit margin, divide your sales income by your net income.
Net Income / total sales = net profit margin
In the example above it is as follows:
5500 / 10000 = 0.55
To find the percentage multiply by 100 = 55%
This means that 55% of revenue is profit.
Net Profit Margin Calculator
Return from net profit margin calculator to Profit and loss statement