Net profit margin is one of the most commonly used profitability ratios for measuring the amount of net profit or net income a business earns for every dollar of revenue generated. The formula for calculating the net profit margin ratio is as follows:

Net Profit Margin = Net Profit / Total Revenue x 100

Net profit is the amount left after subtracting all of a company's expenses from its total revenue. While the net profit margin indicates a company's overall profitability, it should be used along with other financial metrics such as EBITDA and operating profit to provide a better evaluation of a company's performance.

Reviews Add a review
No reviews yet

More From Corporate Finance Institute®

Browse our top rated business templates. See All
restructuring financial model template preview 1 Restructuring Financial Model Template
This restructuring financial model template is used to demonstrate the financial interactions behind the restructuring process. Adjust this model to…
TMT Financial Model Template Preview TMT Financial Model Template
This TMT financial model template is used to value technology, media, and telecom firms. This model provides a template to…
bank financial model template preview 1 Bank Financial Model Template
This bank financial model template is used to value financial institutions group (FIG) companies. This is a comprehensive model that…
Synthetic Call Chart Option Profit/Loss Graph Maker
This free Option Profit/Loss Graph Maker allows the user to combine up to ten different types of options as well…
Directional Trading Strategies Template Directional Trading Strategies Template
The directional trading strategies template allow users to determine the profit when buying options. This template focuses on directional strategies…
HELOC Calculator Template Home Equity Line of Credit (HELOC) Calculator
This home equity line of credit (HELOC) calculator can calculate the maximum amount of loan a homeowner is eligible to…