Out of every ₹100 of sales, how much does the company actually keep?
Net Profit Margin
Lesson 1 of 11 · Profit
Net profit margin is the share of sales left as profit after every cost, interest payment and tax.
In everyday life
You sell ₹100 of samosas at a school fair. After paying for potatoes, oil, the stall and the gas, ₹12 is left in your pocket. Your net margin is 12%.
How it's worked out
Example: Sunrise Tea, a made-up company that sells packaged tea across India.
In words: ₹13.6 kept as profit from every ₹100 of sales.
Try it yourself
Move the sliders and watch the answer, the picture and the verdict change together.
₹13.6 kept as profit from every ₹100 of sales.
- Net profit
- The rest
Each dot is 1 of every 100 in “sales”.
Rough guide
- Thin
- Decent
- Strong
What's a good number?
- Thin
Up to 5%
- Decent
5% to 15%
- Strong
Above 15%
Supermarkets live on 2–4% and are fine; software firms often keep 15–20%. Compare with companies in the same business.
How to read it
Good signs
- The margin holds steady or rises over 5 years.
- It is higher than most rivals in the same industry.
Watch out for
- A one-off gain, like selling land, can make a single year's margin look great. Check the next year.
- A falling margin while sales rise means costs are growing faster than sales.
Read it with
For learning only. Example companies are made up, and the rough guides are rules of thumb, not targets. Nothing here is advice to buy or sell any stock.