accounting
Net Margin
Net margin is final profit after all expenses, taxes, and interest, divided by revenue.
Last updated Reviewed by ICG Funding
Definition
What it means.
Net margin is the bottom-line percentage of every revenue dollar that becomes profit. Small businesses commonly run 5–15% net margin; capital-intensive industries can run lower; professional services firms can run much higher.
Because tax and interest are included, net margin is sensitive to how a business is financed and structured. EBITDA removes that noise for lender comparison. Net margin is the right metric for owners thinking about distributions.
Now what?
Get an offer that accounts for net margin.
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