Enter your benchmark amounts (revenue/expenses, assets, and/or profit before tax) into the Materiality Calculator and choose a method (Weighted, Single-Basis, Performance Materiality, or Tolerable/Trivial).

Materiality Calculator

Pick your company profile and enter one benchmark amount.

Quick estimate
Custom %
Enter a positive number.

Materiality Formula

In the calculator’s Weighted Materiality tab, a blended-benchmark rule-of-thumb is computed using the following formula (amounts must be in the same units): 

M = .0075 * R + .015 * A + .075 * P

Variables:

  • M is the estimated materiality (in the same units/currency as the inputs)
  • R is the total revenue or expenses (same units as M) 
  • A is the total assets (same units as M) 
  • P is the net profit before tax (same units as M) 

How to Calculate Materiality?

The following steps outline how to calculate the weighted (blended-benchmark) estimate shown above.

  1. First, determine the total revenue or expenses (in your chosen units).
  2. Next, determine the total assets (in the same units). 
  3. Next, determine the net profit before tax (in the same units). 
  4. Next, apply the formula from above: M = .0075 * R + .015 * A + .075 * P
  5. Finally, calculate the Materiality.
  6. After inserting the variables and calculating the result, check your answer with the calculator above. 

Example Problem:

Use the following variables as an example problem to test your knowledge.

total revenue or expenses ($) = 50000

total assets ($) = 10000

net profit before tax ($) = 30000

M = .0075 * R + .015 * A + .075 * P = 2775