Net Profit Margin Calculator: Measure Your Business Profitability Instantly
Net profit margin tells you what portion of every sales dollar becomes profit. A 2022 study of all U.S. listed companies found an average net margin of 11.4 % (Damodaran, 2023). Use our calculator to divide net income by sales revenue, multiply by 100, and instantly see your result.
Net Profit Margin Calculator
Net Profit Margin:
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How to use the tool
Enter Net Income: Key in total profit after all expenses. Example values: 95 000 or 310 000.
Enter Sales Revenue: Add gross sales for the same period. Example values: 640 000 or 2 100 000.
Press “Calculate”: The tool divides net income by sales revenue and multiplies by 100 to return a percentage.
Interpret the figure: A 15 % margin means you keep $0.15 from every sales dollar.
Net profit margin is the percentage of revenue left after every expense, tax, and interest charge (Investopedia, URL).
How does the calculator work?
It divides your entered net income by sales revenue, multiplies by 100, then rounds to two decimals—no manual math needed.
Why compare margins to industry averages?
Industry benchmarks reveal whether your efficiency lags or leads competitors, guiding pricing and cost-cutting (Damodaran, 2023).
What is a “good” net profit margin?
A “good” margin exceeds your sector’s mean; for software, aim above 18 %, for retail, above 5 % (Damodaran, 2023).
How can I improve my margin?
Raise prices, trim non-essential costs, renegotiate supply contracts, and streamline operations (SBA, https://www.sba.gov).
Can the margin be negative?
Yes—loss-making firms post negative margins, alerting managers to urgent cost or revenue fixes (U.S. SEC, 2022).
How often should I measure it?
Monthly reviews let you respond fast to shifts, while quarterly views align with financial statements (CFA Institute, 2020).
Is a higher margin always better?
Higher is preferable, yet excessive margins can indicate underinvestment or overpriced products risking market share (Harvard Business Review, 2021).
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