Profit Margins Calculator

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This calculator helps you to measure the most important margin ratios for your company: gross profit margin, operating margin and net profit margin.

These three profit margin ratios indicate how much profit the company makes for every dollar of sales at each level: production, operations and bottom line. They are also called return on sales.

Profit Margins Calculator is part of the Online financial ratios calculators, complements of our consulting team.

Terms of use

  1. Complementarily, in order to calculate the Profit Margins for your business, we offer a calculator free of charge.

  2. You may link to this calculator from your website as long as you give proper credit to C. C. D. Consultants Inc. and there exists a visible link to our website.
    To link to our Profit Margins Calculator from your website or blog, just copy the following html code:

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  3. Although C. C. D. Consultants Inc.'s personnel has verified and validated the Profit Margins calculator, C. C. D. Consultants Inc. is not responsible for any outcome derived from its use. The use of Profit Margins calculator is the sole responsibility of the user and the outcome is not meant to be used for legal, tax, or investment advice.

Definitions and terms used in Profit Margins Calculator

Net Sales
The amount of revenue generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed.
Net sales = Gross sales - Sales returns and allowances
Cost of Goods Sold (COGS)
The direct cost attributable to the production or purchasing of the goods sold by a company. It is also referred as Cost of sales.
Gross Profit
The difference between Net Sales and its Cost of Goods Sold, before deducting overhead, payroll, taxes, interest and other operating expenses.
Gross profit = Net sales - Cost of Goods Sold
Operating Expenses
The expenses incurred by a business in its normal day-to-day operations, but not directly associated with production of goods. Operating expenses include payroll, sales commissions, employee benefits and pension contributions, transportation and travel, amortization and depreciation, rent, repairs etc. These expenses are divided into selling expenses and administrative and general expenses.
Operating Income (also known as Earnings before Interest and Taxes - EBIT)
A measure of a company's profitability that excludes interest and income tax expenses. This is the surplus generated by operations and equals gross profit less all operating expenses.
Operating Income = Gross profit - Operating Expenses
Interest Expenses
A fee paid on borrowed assets, the price paid for the use of borrowed money.
Income tax
The tax levied on the income of a company.
Net profit (also known as earnings, net earnings or net income)
The income that a company has after subtracting costs and expenses from the total revenue. Net income is sometimes called the bottom line.
Gross profit margin
A key financial indicator used to asses the profitability of a company's core activity, excluding fixed cost.
Gross Profit Margin = (Net Sales - Cost of Goods Sold) *100 / Net Sales
Operating margin
A measurement of what proportion of a company's revenue is left over, after deducting direct costs and overhead.
Operating Margin = Operating Income *100 / Net Sales
Net profit margin
A key financial indicator used to asses the profitability of a company.
Net Profit Margin = Net profit (after taxes) *100 / Net Sales