Profit Margin = (Net Profit ÷ Revenue) × 100
Net Profit = Revenue – Total Expenses
Revenue = Total sales or income
Total Expenses = Cost of goods sold + operating expenses + taxes + interest
Gross Profit Margin = (Gross Profit ÷ Revenue) × 100
Gross Profit = Revenue – Cost of goods sold
Operating Profit Margin = (Operating Profit ÷ Revenue) × 100
Operating Profit = Gross Profit – Operating expenses
Example: If Revenue = 10,000 and Net Profit = 2,000
Profit Margin = (2,000 ÷ 10,000) × 100 = 20%