Net Profit Margin Metric

The Net Profit Margin KPI measures how effective your business is at generating profit on each dollar of revenue you bring in. This financial KPI is a measure of the profitability of your business and is instrumental in making long- and short-term financial decisions. Understanding this KPI may even give you an advantage in a pricing war with your competitors. See also: Gross Profit Margin.

Formula

Net profit margin = Net Income / Total revenue

Note: Net income and total revenue can be found on the income statement.