Glossary
What is net margin?
Net margin is net profit as a percentage of revenue: what is left after cost of sales, overheads, interest and tax, divided by sales. It shows how much of each unit of revenue the business keeps once everything has been paid.
Also called: Net profit margin
Net margin moves for reasons that gross margin does not, so the two are read together. A business whose gross margin is steady but whose net margin is falling is usually spending more on overheads relative to sales.
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Questions people ask
What is the difference between operating margin and net margin?
Operating margin is operating profit (before interest and tax) over revenue. Net margin is after interest and tax.