Profit Margin
How many cents of profit per dollar of revenue
Definition
Net profit margin shows what percentage of revenue actually becomes profit after all costs, including cost of goods, operating expenses, interest, and taxes. It's a core measure of business efficiency.
Net Income ÷ Total Revenue × 100
Example
Apple's revenue is $400B and net income is $100B → profit margin = 25%. They keep $0.25 of every dollar they bring in. A typical grocery store margins around 2-3%.
Typical range
SaaS: 20-30%+; retail: 2-5%; banking: 20-30%; industrials: 5-12%