Net Margin

Net margin means net profit as a percentage of revenue. In simple terms, net margin shows how much final profit a company keeps from each dollar of sales. Net margin is important because it helps investors compare profitability between companies and across time. A higher net margin may suggest strong pricing power, efficient operations, or lower costs. For example, if a company has $100 in revenue and $12 in net profit, its net margin is 12%. Net margin is not the same as gross margin. Net margin includes all costs, while gross margin only subtracts direct costs.