Profit margin calculator
What remains after the operating expenses, interest and income-tax amount you enter?
A teaching example in the units shown below.
These authored example inputs illustrate the calculation. Replace them with your own documented amounts, periods and rates; they are not measured industry averages or available offers.
Use one consistent period. Exclude pass-through sales tax and subtract returns and allowances.
Enter the complete cost of delivering those sales. Classify costs consistently with the operating-expense input.
Include relevant depreciation once here or in cost of sales. This is not an EBITDA calculation.
Enter interest expense, excluding repayment of loan principal.
Enter an actual estimate. A negative value means an explicitly assumed income-tax benefit; no tax rate is calculated.
Your entered scenario
Starting exampleCalculation updated using the entered assumptions.
- Gross margin
- 40.0%
- Operating margin
- 20.0%
- Pretax profit
- $1,800.00
Formula and interpretation
Gross profit = revenue − cost of sales
Operating profit = gross profit − operating expenses
Pretax profit = operating profit − interest expense
Net profit = pretax profit − entered income-tax expense
Each profit margin = the corresponding profit ÷ revenue
To reproduce the worked example, choose Hypothetical arithmetic example under Starting example. Business presets have their own inputs; compare the selected values before applying the result.
Use the same accounting period for every entry and include relevant depreciation once.
A negative tax amount is an explicit entered benefit. The tool does not determine tax liability, deductions or eligibility.
Worked example: $10,000 revenue less $6,000 cost of sales gives $4,000 gross profit. Deducting $2,000 operating expense, $200 interest and $300 entered income tax leaves $1,500 net profit, a 15% net margin. Another $500 of operating expense reduces that result to $1,000.
The Barbershop case displays EBITDA before depreciation, interest and tax. To use this tool for a full accounting margin, supply those additional expenses on the same period basis; do not enter owner distributions or loan principal as income-statement costs.
Definitions and sources
These references support definitions and calculation boundaries, not the selected amounts. Worked examples below use the hypothetical arithmetic inputs. A selected business preset has its own roster, cost allocation and evidence; its results can differ without a formula error.
- Financial-statement definitions — U.S. Securities and Exchange Commission. Supports the income-statement sequence and the distinction between earnings and cash flows. Accessed October 4, 2026.
Continue with a related calculation
Connect the calculation to a complete operating plan
Review startup uses, staffing, annual results and input evidence alongside the relevant worksheets. A single calculation does not replace local quotes or a dated cash schedule.
Read the Barbershop operating case →Check the input evidence and limits →
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