Net Profit Margin Calculator
Calculate net profit margin (net income margin) from net income and revenue, or derive net income from revenue and total expenses. Compare a prior period and test a target margin.
Results
Net profit margin formula
Net profit margin = net income ÷ net revenue × 100%. Net income is the bottom-line profit or loss after operating costs, interest, income tax and other items included in the reporting basis.
With the expense method, net income = net revenue − total expenses and other reductions. For a target, required net income = net revenue × target margin; the gap is required net income minus current net income.
Verified example
| Inputs | Calculation | Result |
|---|---|---|
| $1,200,000 revenue and $96,000 net income | $96,000 ÷ $1,200,000 × 100 | 8.00% net profit margin |
| $1,200,000 revenue and $1,104,000 total expenses | $1,200,000 − $1,104,000 | $96,000 net income and 8.00% margin |
| Prior margin 6.00%; current margin 8.00% | 8.00 − 6.00 | +2.00 percentage points; +33.33% relative |
| $1,200,000 revenue and 10.00% target | $1,200,000 × 10% | $120,000 required net income; $24,000 gap |
Net margin, operating margin and gross margin
Gross margin subtracts cost of goods sold. Operating margin also subtracts operating expenses but remains before interest and income tax. Net profit margin uses bottom-line income after those items, so it answers a different question and is often lower when financing costs and taxes are positive.
Inputs, limits and interpretation
- Net revenue must be greater than zero. Monetary inputs accept ordinary decimal notation, up to two decimal places and a magnitude no greater than 1,000,000,000,000.
- Net income may be negative or zero. Total expenses cannot be negative; they may exceed revenue and produce a valid net loss.
- The optional target accepts −1,000% through 1,000%. The calculation holds current revenue constant and does not forecast changes in costs, financing or tax.
- Enter both prior-period fields or leave both blank. Use consistent accounting classifications, entity scope and reporting periods.
- The currency selector only changes number formatting and does not convert currencies. Scientific notation is not accepted.
- “Revenue less net income” is an arithmetic remainder, not a complete expense reconciliation when other income, gains or unusual items exist.
A higher net margin is not automatically better across unrelated industries. Compare consistent definitions over time and consider capital intensity, financing, tax, unusual items and earnings quality.
Frequently asked questions
Is net profit margin the same as net income margin?
Usually, yes. Both divide bottom-line net income by net revenue. Confirm whether a source uses reported, adjusted or attributable income before comparing results.
Can net profit margin be negative?
Yes. A negative result means the selected net loss exceeded zero while revenue remained positive.
Should interest and tax be included?
Yes, under the standard net-profit-margin formula. Operating margin excludes them; net profit margin reflects the bottom line after financing and tax.
Related financial calculators
- Operating Margin Calculator — measure EBIT as a percentage of revenue.
- COGS Calculator — calculate gross profit and gross margin.
- EBITDA Calculator — derive EBITDA and compare EBITDA margin.
- Return on Assets Calculator — relate net income to average assets.