PLAIN-LANGUAGE DEFINITION
Net Income expressed as a percentage of Revenue. Shows how much of each dollar of revenue ultimately becomes profit. Formula: Net Income ÷ Revenue × 100.
How to calculate it
Net margin = Net income ÷ Revenue × 100. Unlike gross margin, this incorporates overhead and other expenses that reduce bottom-line profit.
EXAMPLE / INTERPRETATION
If net income is $65,000 on $750,000 of sales, net margin is about 8.7%.
Where this connects to Impresa
You may encounter this concept when reviewing Financial Health. Start with the underlying inputs and check the applicable reporting period before interpreting the result.
Read the Financial Health guideA NOTE ON INTERPRETATION
NEXT DEFINITIONEBITDA ↗Definitions here explain the concept. Accounting treatments, formulas, and industry comparisons may vary. Use your own records and qualified advice for material decisions.