Net Margin
The percentage of revenue that remains as actual profit after all expenses, including operating costs, interest, and taxes, are subtracted.
Net margin is calculated as net income divided by total revenue, and it’s the most complete profitability snapshot since it accounts for every cost of running the business, not just the direct cost of goods sold.
Because it’s the bottom-line number, net margin is a common reference point in underwriting for judging how much cushion a business has to absorb a new loan payment without straining its overall profitability.
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