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Profit Margin Calculator
Calculate gross, operating, and net profit margins
Income Statement
$
$
Direct costs to produce goods
$
Salaries, rent, marketing
$
Interest, investments
$
Interest, one-time costs
%
Corporate tax rate
Gross Profit Margin
40%
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Operating Margin
20%
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Net Profit Margin
16.27%
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EBITDA
$100,000
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Profit Margin Comparison
Detailed Income Statement
Revenue:$500,000
Less: COGS-$300,000
Gross Profit:$200,000 (40%)
Less: Operating Expenses-$100,000
Operating Income:$100,000 (20%)
Other Income/Expenses+$3,000
EBT (Earnings Before Tax):$103,000
Less: Taxes (21%)-$21,630
Net Income:$81,370 (16.27%)
Understanding Profit Margins
Gross Profit Margin
(Revenue - COGS) ÷ Revenue
- Measures production efficiency
- Higher = better pricing power
- Industry-specific benchmarks
- Retail: 20-40%
- Software: 70-90%
Operating Margin
Operating Income ÷ Revenue
- Operating efficiency
- Excludes taxes & interest
- Core business profitability
- Good: >15%
- Excellent: >20%
Net Profit Margin
Net Income ÷ Revenue
- Bottom-line profitability
- After all expenses & taxes
- Key metric for investors
- Good: >10%
- Excellent: >20%