A profitability ratio calculated by dividing net income by total revenue, expressed as a percentage. It represents the percentage of revenue that remains as profit after all expenses, including operating costs, interest, and taxes.
'Net' from Latin 'nitidus' meaning clean/clear (what remains after deductions), 'margin' from Latin 'margo.' The concept formalized in double-entry bookkeeping during Renaissance Italy, becoming standardized as businesses grew more complex and needed bottom-line profitability measures.
Net margin is the ultimate truth-teller in business - it's what's left after everyone gets paid: suppliers, employees, landlords, lenders, and the tax man! A company can have impressive revenue growth but declining net margins often signal underlying problems that will eventually catch up with the stock price.
Complete word intelligence in one call. Free tier — 50 lookups/day.