Meaning
Net margin shows how much net profit remains from revenue.
Formula
Net income / revenue
Practical reading
Higher and stable margins usually indicate stronger pricing power or cost control.
Calculation detail
Net margin = net income / revenue ร 100. Unlike gross or operating margin, it includes financing, taxes and non-operating items, so it is the broadest profitability margin.
What to check
Look for stable or improving margins alongside revenue growth. A rising margin can indicate pricing power, an improving product mix or better cost discipline.
Limits and caveats
A sale of an asset, tax benefit or other one-off item can lift net income without improving the operating business.