Bookkeeping & Reporting

Net Margin

Net margin is the percentage of revenue that remains as profit after all expenses are considered.

Quick answer

Net margin is the percentage of revenue that remains as profit after all expenses are considered.

It matters because a business can show strong sales and even solid gross margin while still producing weak final profit.

A business earning $10,000 of net income on $100,000 of revenue has a 10 percent net margin.

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Plain-English Definition

What Net Margin means

Net margin is the percentage of revenue that remains as profit after all expenses are considered.

Why it matters It matters because a business can show strong sales and even solid gross margin while still producing weak final profit.
Simple example A business earning $10,000 of net income on $100,000 of revenue has a 10 percent net margin.
Related Questions

Questions people ask about Net Margin

What does Net Margin mean?

Net margin is the percentage of revenue that remains as profit after all expenses are considered.

Why does Net Margin matter?

It matters because a business can show strong sales and even solid gross margin while still producing weak final profit.

What is a simple example of Net Margin?

A business earning $10,000 of net income on $100,000 of revenue has a 10 percent net margin.

When should I ask a CPA about Net Margin?

Ask a CPA when the term changes how your books are kept, how reports are read, or how tax numbers are produced from accounting records.

How is Net Margin different from Gross Margin?

Net Margin means Net margin is the percentage of revenue that remains as profit after all expenses are considered. Gross Margin means Gross margin is the percentage of revenue left after direct costs of sales are subtracted. The difference is that they apply to different tax, accounting, or business situations and should not be treated as interchangeable.

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