How this number is made
Net margin is profit divided by revenue. Profit should be after the costs you care about. If you type gross profit, you have computed a gross margin and should say so.
- Use the same period for revenue and profit.
- A loss is a negative margin. Type the profit as a negative number if you lost money.
Formula
Net margin = profit ÷ revenue.
Worked example
With the figures already in the form, net margin is 12.0%.
Questions
What is a good margin?
It depends on the industry. A grocery and a software firm are not comparable. Compare yourself with your own past year and with true peers.
Is profit the same as cash?
No. Depreciation and the timing of bills sit between profit and cash.