Reading the accounts
Net margin
Net income as a percentage of revenue — what proportion of each sale ends up as profit.
How it works
Net margin is the most complete margin and the least comparable, because it includes financing structure and tax position alongside operating performance.
It is most useful compared with the same company over time, or with direct competitors in the same jurisdiction.
Formula
Net margin = net income ÷ revenue × 100Related terms
- Net incomeWhat is left after every cost, including interest and tax — the profit belonging to shareholders.
- Operating marginOperating income as a percentage of revenue — how much of each sale survives running the business.
- Gross marginWhat proportion of revenue is left after the direct cost of producing what was sold.
Mentioned in
More in Reading the accounts
- Off-balance-sheet
- Operating cash flow
- Net debt / EBITDA
- Operating expenses
- Net debt
- Operating income
- Liabilities
- Operating leverage
All 51 Reading the accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.