Result
Net margin
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Net margin = net profit ÷ revenue × 100%. Unlike gross and operating margin, net margin counts absolutely everything: loan interest, taxes, one-off write-offs and other income and expenses not directly tied to the core business.
That's exactly why net margin can't be compared in isolation from financing structure and tax jurisdiction: two operationally identical companies with different debt loads or tax rates will end up with different net margins. Operating margin is the better tool for comparing operating efficiency specifically.
Low net margin alongside high operating margin is a cue to look at the non-operating items: debt interest, one-off losses, tax burden. High net margin alongside low operating margin usually means a one-off gain (an asset sale, a settlement) that shouldn't be built into future plans.