net margin


Net profit divided by net revenues, often expressed as a percentage. This number is an indication of how effective a company is at cost control. The higher the net margin is, the more effective the company is at converting revenue into actual profit. The net margin is a good way of comparing companies in the same industry, since such companies are generally subject to similar business conditions. However, the net margins are also a good way to compare companies in different industries in order to gauge which industries are relatively more profitable.
also called net profit margin.

For more information, see Gross vs Net.

Use net margin in a sentence

I wondered what the net margin was and that made us all happy and ready to take the next step.

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ABC Corporation gave John Smith a good bonus because their net margin increased by 15% since he was hired as production manager.

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High value added service industries such as law or finance frequently have some of the higher net margin amongst private firms due to low fixed and variable costs.

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