Net Profit Margin
Net Profit Margin tells an investor how much of each unit of revenue ends up as profit for shareholders after all costs, interest and taxes.
How it is calculated
- Unit
- Percent
- Periods
- TTM, Quarterly, Annual
- Source
- Calculated by stockrow from the inputs below
- Made from
- Net Income Allotted to Shareholders, Revenue
- Used in
- Net Margin vs Own 10-Year Range
Reading Net Profit Margin
How to read it
stockrow divides net income allotted to shareholders by revenue for the same period. The margin rises when profit grows faster than sales — through higher prices, lower costs, lower interest or tax, or a one-off gain — and falls when costs, interest or tax take a larger share, or when a write-down hits profit. Because it is measured after everything, it combines how efficiently the business runs with how it is financed and taxed. stockrow shows it for the trailing twelve months, for each quarter and for each fiscal year.
What is typical
Net margins vary a great deal between kinds of business. Software, pharmaceutical and asset-light franchise companies often keep a large share of revenue, while supermarkets, distributors, carmakers and airlines keep a small one and depend on volume. Compare the figure with the median for the company’s sector rather than with companies in other industries.
Pitfalls
Net income includes one-off gains and losses, such as asset sales, impairments or tax adjustments, so one period’s margin can be far from the business’s usual level. Losses make the margin negative. Quarterly margins can swing with seasonality, so the trailing-twelve-month figure is steadier.