UK
IRE
AU
CA
US
ZA
NAHead of Content
Page written by Ian Hawkins. Last reviewed on March 11, 2026. Next review due April 1, 2027.
This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.
Profit margin is a measure of a company’s profitability. It shows the percentage of revenue that exceeds the costs of goods sold (COGS) and other expenses. In simple terms, profit margin indicates how much profit a company makes for every dollar of sales.
Net profit margin is a key financial metric that shows the percentage of net income generated from total revenue. It takes into account all expenses, including operating costs, interest, taxes, and one-time expenses, providing a comprehensive view of a company’s profitability.
Let’s say a company has the following financial figures:
To calculate the net profit:
Net profit= Total revenue−(COGS+operating expenses+interest+taxes)
Net profit=500,000−(300,000+100,000+10,000+20,000)
Net profit=500,000−430,000
Net profit=70,000
Net profit margin = (Net profit/Total revenue)×100
Net profit margin=(70,000500,000)×100
Net profit margin=14%
There isn’t a one-size-fits-all optimal net profit margin ratio. It varies by industry, company size, and business model. However, a consistently increasing net profit margin is generally a positive indicator.
A good net profit margin varies by industry, but generally, a margin above 10% is considered healthy. For some industries, a margin of 5-10% might be typical, while others may see margins above 20%.
A 30% margin on $100 means you make $30 in profit. This is calculated as:
100×0.30 = 30
Disclaimer: Swoop Finance Ltd (Swoop) helps Canadian firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans or other finance products ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. Swoop may receive a commission or finder’s fee for effecting such introductions. If you feel you have a complaint, please read our complaints section highlighted above and also contained within our terms and conditions.
yet? Register here!