GlossaryNet Margin

Net Margin

What's actually left for shareholders after every cost.

Net margin is net income as a percentage of revenue — what remains for shareholders after every operating cost, interest payment, and tax. It's the bottom-line profitability measure.

The formula

Net IncomeRevenue
= Net Margin

Why it matters

  • The cleanest single number for 'how profitable is this business, all in.'
  • Affected by one-off items (asset sales, write-downs, tax adjustments) — check if a margin spike is recurring.
  • Thin net margins leave little cushion if revenue dips, which is why margin trend matters as much as the level.

How to read it

< 5%Thin margins — common in retail, low pricing power
5%–15%Healthy for most industries
> 20%Strong pricing power or an asset-light model

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