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Profit margin calculator

What remains after the operating expenses, interest and income-tax amount you enter?

FreeNo signupU.S. dollarsUpdated October 4, 2026

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 example

Calculation updated using the entered assumptions.

Gross profit$4,000.00
Operating profit$2,000.00
Net profit$1,500.00
Net margin15.0%
Gross margin
40.0%
Operating margin
20.0%
Pretax profit
$1,800.00
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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.
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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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