Connect With Us
Register
Login
Net profit margin definition
Net profit margin is a profitability ratio that shows how much of each unit of revenue a company keeps as net income. It is expressed as a percentage.
Net profit margin divides net income by revenue and multiplies the result by 100. Because net income already accounts for cost of goods sold, operating expenses, interest, tax, depreciation, and amortisation, the ratio captures profitability after every cost. A higher margin means the company converts more of its sales into bottom-line profit.
Net profit margin sits below two related ratios. Gross profit margin measures the revenue left after cost of goods sold alone; operating margin measures profit after operating costs but before interest and tax. Net profit margin is the strictest of the three, because it deducts all costs before dividing by revenue.
Net profit margin Example
A company reports USD 1,000,000 in revenue and USD 120,000 in net income. Net profit margin is:
USD 120,000 √∑ USD 1,000,000 √ó 100 = 12%
The company runs a 12% net profit margin, so it keeps USD 0.12 of net profit from every USD 1.00 of sales.
Get Started!
Sign up and access the Global Markets in less than 3 minutes
The information provided on this website is of a general nature only and does not constitute personal financial advice. Before acting on any information on this website, you should consider the suitability of the information in relation to your objectives, financial situation and needs. Investing in CFDs and FX Margin Contracts carries significant risks and is not suitable for all investors. You may lose more than your initial deposit. You do not own, or have, any interest in the underlying asset. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. It is important that you read and consider the disclosure document before you acquire any product listed on the website. The information and advertisements offered on this website are not intended for use by any person in any country or jurisdiction where such use would be contrary to local laws and regulations. The Products and Services offered on this website are not intended for residents of the United States, Malaysia and Thailand.
TMGM is authorized and regulated in various jurisdictions.
Trademax Australia Limited, trading as TMGM, is regulated by the Australian Securities and Investments Commission (ASIC), AFSL no. 436416 and is located at Level 28, One International Tower, 100 Barangaroo Avenue, 2000 Sydney, NSW Australia.
Email: [email protected]
Trademax Global Limited, trading as TMGM, is authorized and regulated by the Vanuatu Financial Services Commission (VFSC), registration number 40356 and registered at 1276, Kumul Highway, Port Vila, Vanuatu, Republic of Vanuatu.
Email: [email protected]
Trademax Global Markets (SE) Limited, trading as TMGM, is authorized and regulated by the Financial Services Authority (FSA) of Seychelles, with license number SD224. The company is registered at Office No 13, Providence Estate ABIS Centre, Mahe, Seychelles.
Email: [email protected]
Trademax Global Markets (International) Pty Ltd, trading as TMGM, is authorized and regulated by the Financial Services Commission, Mauritius (FSC) with license no. GB22201012, and registered at 33, Edith Cavell Street C/o IQ EQ Fund Services (Mauritius) Ltd Port Louis, 11324 Mauritius.
Email: [email protected]
Copyright © TMGM. All rights reserved