Accounting
Intermediate

Net Profit Margin

The percentage of revenue that survives as profit after all costs.

Formula

NPM=Net IncomeRevenue×100%NPM = \dfrac{Net\ Income}{Revenue}\times 100\%

Variables

NPMNet profit margin
Net IncomeBottom-line profit
RevenueTotal sales

Example

$70k / $500k = 14% margin

Did You Know?

Grocery chains thrive on 1–3% margins through huge volume, while software firms may exceed 30%.

marginprofitabilityincome statement