Enter the net profit and total revenue into the net profit margin calculator. The calculator will yield a result in a percentage.
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Net Profit Margin Formula
The following formula is used to calculate a net profit margin.
NPM = NP / R *100
- Where NPM is the net profit margin (%)
- NP is the total net profit
- R is the total revenue
This formula could be used for single product or a total company as a whole.
Net Profit Margin Definition
A net profit margin is defined as the ratio of the total net profit to the total net revenue.
How to calculate net profit margin?
How to calculate net profit margin
- First, determine the total net profit
The total net profit should be equal to the total revenue minus the total costs. Costs include anything from raw material to labor if looking at a single product.
- Second, determine the total revenue
The total revenue is equal to the total price of a good times the number of times it’s been sold.
Enter the information from steps 1 & 2 into the formula or calculator. The result will be the net profit margin percent.
Net profit margin is a percent that represents the ratio of profit to total revenue. It’s similar to margin, but instead of taking the ratio of total revenue to costs, it’s the ratio of total profit to revenue.
The answer to this question depends on the surface or good. Improving net profit margin is always good for the performance of a company.