Net Margin Calculator

Net profit margin

Net margin is the slice of revenue that survives as net income once every expense has been paid: COGS, operating costs, taxes and financial charges. net margin = net income / revenue · 100%. Take an example. A company earns R$ 100,000 in revenue and keeps R$ 15,000 as net income, which puts its net margin at 15%. The benchmarks swing a lot from one sector to the next. Brazilian banks hit 20–30%, helped along by leverage, while retail gets by on 2–5% with a thin margin offset by high turnover, and commodities sit at 1–3%. Where gross margin stops short, net margin takes in the whole cost structure of the business — fixed expenses, taxes (IRPJ, CSLL, ICMS, PIS/COFINS) and interest on debt. That makes it the cleanest profitability number when you want to compare one company against another.

Applications and context

It's a core metric for fundamental analysis of listed companies, for peer comparisons, for valuation (multiples like P/E and EV/EBIT lean on net income), and for internal management reporting. Track the net margin across several quarters and you'll see whether gains from scale are actually landing in the bottom line, or getting swallowed by rising opex and a heavier tax burden.

FAQ

Why is net margin so much lower than gross margin? Because it picks up every cost that gross margin leaves out, from salaries and rent to marketing, taxes and interest.

Is a higher net margin always better? Not really. High-turnover businesses like supermarkets run on low margins yet earn a strong ROIC, so keep the comparison within the same sector.

How does net margin differ from EBITDA margin? EBITDA margin leaves out depreciation, interest and taxes. Net margin folds all of them back in, so it shows the true bottom line.