how is the profit margin computed

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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. …

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  • How do you calculate profit margin on net income?

  • Net Profit Margin = Net Income / Revenue x 100. As you can see in the above example, the difference between gross vs net is quite large. In 2018, the gross margin is 62%, the sum of $50,907 divided by $82,108. The net margin, by contrast, is only 14.8%, the sum of $12,124 of net income divided by $82,108 in revenue.

  • What are profit margins?

  • The Bottom Line Profit margins are perhaps one of the simplest and most widely used financial ratios in corporate finance. A company’s profit is calculated at three levels on its income statement, starting with the most basic鈥?gross profit 鈥攁nd building up to the most comprehensive, net profit. Between these two lies operating profit.

  • What is NETnet profit margin?

  • Net Profit Margin is net profit divided by net revenue. The net profit is revenue minus all expenses. These include both operating and financial expenses. Revenue is subtracted, including taxes, interest expenses, and depreciation.

  • How do you calculate the profit margin for Starbucks?

  • The net profit for the year is $2.82 billion. The profit margins for Starbucks would therefore be calculated as: Gross profit margin = ($12.8 billion $21.32 billion) x 100 = 60.07%. Operating profit margin = ($4.17 billion $21.32 billion) x 100 = 19.57%.

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