# how is the profit margin computed Profit margin formulaGross Profit Margin = Gross Profit /Revenue x 100Operating Profit Margin = Operating Profit /Revenue x 100Net Profit Margin = Net Income /Revenue x 100. As you can see in the above example,the difference between gross vs net is quite large. …

• ### What is the formula for profit margin?

• Profit margin formula 1 Gross Profit Margin = Gross Profit / Revenue x 100. 2 Operating Profit Margin = Operating Profit / Revenue x 100. 3 Net Profit Margin = Net Income / Revenue x 100. As you can see in the above example, the difference between gross vs net… More …

• ### What is net profit margin?

• What is Net Profit Margin? Net Profit Margin (also known as 鈥淧rofit Margin鈥?or 鈥淣et Profit Margin Ratio鈥? is a financial ratio used to calculate the percentage of profit a company produces from its total revenue. It measures the amount of net profit a company obtains per dollar of revenue gained.

• ### What are the three types of profit margins?

• When assessing the profitability of a company, there are three primary margin ratios to consider: gross, operating, and net. Below is a breakdown of each profit margin formula. Gross Profit Margin = Gross Profit / Revenue x 100. Operating Profit Margin = Operating Profit / Revenue x 100. Net Profit Margin = Net Income / Revenue x 100.

• ### How do you calculate gross margin and net margin?

• Based on the above income statement figures, the answers are: Gross margin is equal to \$500k of gross profit divided by \$700k of revenue, which equals 71.4%. Net margin is \$100k of net income divided by \$700k of revenue, which equals 14.3%.