Net margin

A margin is a profit number expressed as a percentage of revenue. It tells you how many cents of each sales dollar the company keeps at a given point on the income statement.

Net margin is the final, bottom line margin. It measures what percentage of revenue survives every single cost the company faces: cost of goods sold, operating expenses, depreciation, interest, and taxes. It is what the shareholders actually own a piece of.

The formula is: Net income / Revenue x 100 = Net margin

Net margin is the most commonly quoted profitability number, though it can be misleading when looked at in isolation. One time gains or losses, unusual tax events, or large non cash charges can move it sharply from one year to the next, so it is best read alongside operating margin and gross margin to see whether the change reflects the underlying business or something else.