net margin

Net Margin

What's left from revenue after subtracting every cost — production, operations, marketing, taxes — shown as a percentage.

When you'd see it: Anywhere the question "is this company actually profitable?" gets asked. Net margin is the last line on the income statement (often called the "bottom line") divided by revenue. Grocery chains run 1-3%; software businesses can run 20-30%.

Why it matters: Net margin is the honest answer to "what does the business keep." It strips out the flattering view of gross margin and shows what actually falls to the bottom. Two companies with identical revenue can have wildly different net margins — and the one with the higher number is the one with the real business.

Common mistakes: Comparing net margins across industries as if they're directly comparable. A 3% net margin is excellent for a grocery store and terrible for a SaaS company. Always compare within an industry, not across.

Related P&L, EBITDA