What is Net Margin?



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We understood computing gross margin as Total revenue-COGS, but how to we derive the Net Margin, in course slide there is mention of Operating Margin in relation to Operating Expenses, kindly resolve the query.

2 Answer(s)


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Net Margin is Gross Margin-Operating Expenses-Interest-Taxes. That is the final profit left over in a company that goes to the investors or the shareholders.

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Gross Margin is Revenue - Operating Expenses. The gross margin is the money you have left over to pay salaries, rent, taxes etc.

IT companies are typically high gross margin industries were as retail companies are typically low gross margin industries.