— Business & Valuation
Profit Margin Calculator
Calculate gross, operating, EBITDA, and net profit margins from one income statement. See each profit layer, margin, benchmark comparison, markup conversion, and trend so revenue’s path to net profit is clear.
Net profit margin
9%
- Gross margin
- 40%
- EBITDA margin
- 23%
- Operating margin (EBIT)
- 15%
- Gross markup
- 66.67%
Try: All four margins, Net income directly, Versus a 7% benchmark, Loss-making
— The four profit levels
| Level | Amount | Margin % |
|---|---|---|
| Revenue | $1,000 | 100% |
| Gross profit | $400 | 40% |
| EBITDA | $230 | 23% |
| Operating income (EBIT) | $150 | 15% |
| Net income | $90 | 9% |
— Margins over time
| Period | Gross margin | Operating margin | Net margin |
|---|---|---|---|
| FY2022 | 40% | 12% | 7% |
| FY2023 | 41.09% | 13.48% | 8.04% |
| FY2024 | 40% | 15% | 9% |
— Every margin at once
Download— How it works
Gross margin = (Revenue − COGS) ÷ Revenue. Operating margin = EBIT ÷ Revenue. EBITDA margin = (EBIT + D&A) ÷ Revenue. Net margin = Net income ÷ Revenue. Each is the profit at that level over revenue.
Four margins, one income statement
Each margin is a profit level divided by revenue, and reading them together is far more revealing than any one alone. Gross margin is what’s left after the direct cost of goods — the product’s raw economics. Operating margin (EBIT) is after the cost of running the business too — the core operating efficiency. EBITDA margin adds depreciation and amortization back to operating profit, stripping out a large non-cash charge so you can compare operating performance across companies with different asset bases and accounting. Net margin is the true bottom line, after interest and tax. This calculator computes all four from one set of inputs and lays them out as a cascade, so the picture is complete in a single view rather than scattered across separate tools.
Worked example — revenue 1,000, COGS 600, opex 250 (incl. 80 D&A), interest 30, tax 30: Gross 400 (40%) → EBITDA 230 (23%) → operating 150 (15%) → net 90 (9%). EBITDA sits above operating because the 80 of D&A is added back.
Reading the cascade
The margin cascade is the diagnostic. Revenue enters at the top and steps down through each cost — COGS to gross, cash operating costs to EBITDA, depreciation to operating income, then interest and tax to net — and the size of each step shows where profitability is won or lost. A strong gross margin that thins sharply by the operating line points to heavy overheads; a healthy operating margin that shrinks at the bottom points to a debt or tax burden. The gap between EBITDA and net margin is, in effect, the cost of the company’s assets and capital structure. Watching the four levels together turns a single profitability number into a map of the cost base — which is exactly what investors and operators use it for.
Benchmarks, trends and the focused tools
Margins mean most in context. Compare against an industry benchmark to judge efficiency versus peers, and track the four across periods or business segments to see the direction of travel — widening margins signal pricing power or operating leverage, narrowing ones a warning even amid revenue growth. If you only need one layer, the focused Gross Margin and Net Profit Margin calculators are simpler entry points to this same engine, and the Break-even and EBITDA Multiple tools build on the contribution and EBITDA figures here. Educational tool only — not financial advice; margins are shaped by accounting choices, one-off items and how costs are classified, so compare like with like and read several periods rather than a single snapshot.
— Reader questions
What are the four profit margins?
Gross margin (after cost of goods sold), operating margin or EBIT margin (after operating expenses too), EBITDA margin (operating profit with depreciation and amortization added back), and net margin (after everything, including interest and tax). Each is the profit at that level divided by revenue. Together they show how profit is built up — and eroded — from the top line to the bottom.
Why is EBITDA margin higher than operating margin?
Because EBITDA adds depreciation and amortization back to operating income. D&A is a real expense that reduces operating profit, but it’s non-cash, so EBITDA — earnings before it — is always at least as large as EBIT, and the EBITDA margin sits above the operating margin. The gap between them is the D&A as a share of revenue.
Which profit margin should I use?
It depends on the question. Gross margin judges the product; operating margin judges the business’s core operations; EBITDA margin compares operating performance across companies with different capital structures and asset bases; net margin shows what shareholders ultimately keep. The most reliable read comes from looking at all four together, which is what this calculator shows.
What is the difference between margin and markup?
Margin measures profit against the selling price (or revenue); markup measures the same profit against cost. Markup is always the larger percentage — a 50% markup is a 33% margin. This calculator shows the gross markup beside the gross margin, and the dedicated Gross Margin calculator includes a full conversion reference.
How do these relate to the Gross Margin and Net Profit Margin calculators?
They share the same engine. The Gross Margin and Net Profit Margin tools are simplified, focused entry points for a single layer, while this Profit Margin calculator is the umbrella that computes and displays all four levels at once. Use a focused tool when you need just one margin, and this one when you want the full cascade.