Profit Margin Calculator
The full margin stack, from revenue down to net income, plus EBITDA.
An income statement is a subtraction problem told in stages, and each stage answers a different question. Gross margin asks whether the product itself makes money. Operating margin asks whether the business around it does. Net margin asks what is left after lenders and the government.
Worked example. On $1,000,000 of revenue with $400,000 of cost of goods, gross profit is $600,000, a 60% margin. Take out $350,000 of operating expenses and operating income is $250,000, a 25% margin. After $50,000 of interest and $40,000 of tax, net income is $160,000, a 16% net margin.
Frequently asked questions
Which margin matters most?
They answer different questions, so it depends what you are diagnosing. Falling gross margin points at pricing or input costs. Healthy gross margin with weak operating margin points at overhead. Strong operating margin with weak net margin usually points at debt.
Is EBITDA the same as cash flow?
No, and treating it that way is a well-known trap. EBITDA ignores working capital changes and capital expenditure, both of which consume real cash. A company can grow EBITDA while burning cash if it has to keep buying equipment or funding receivables.
What is a good net margin?
Highly industry-dependent. Retail and distribution often run 1 to 3%, industrials mid single digits, and software can exceed 20%. The trend for a single company over time is usually more informative than any cross-industry comparison.
Why is my net margin negative when gross margin is healthy?
Because overhead exceeds gross profit. That is the normal profile of an early-stage or over-expanded business, and it is fixable through either more volume over the same fixed costs or lower fixed costs.
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Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.