Net Margin
Short answer
Net margin is net income divided by revenue, expressed as a percentage. It is the bottom-line profitability of a business after all costs — COGS, operating expenses, interest, and taxes.
Formula
Net Margin (%) = Net Income / Revenue × 100
Take net income (the bottom line of your income statement), divide by revenue, multiply by 100.
Why it matters
Net margin is the true bottom line. It's what's left for owners, reinvestment, or paying down debt. Two businesses with identical EBITDA can have very different net margins if one is debt-heavy or tax-inefficient.
Benchmarks
People also ask
Common questions about Net Margin
What is Net Margin?+
Net margin is the percentage of revenue you actually keep after every expense — including taxes and interest.
How is Net Margin calculated?+
Take net income (the bottom line of your income statement), divide by revenue, multiply by 100.
What is a good Net Margin?+
A healthy net margin is typically around ≥ 15% — strong. Specific targets vary by industry and stage; check our benchmarks above for your sector.
Why does Net Margin matter?+
Net margin is the true bottom line. It's what's left for owners, reinvestment, or paying down debt.
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