What ratio measures net income as a percentage of revenue?

What ratio measures net income as a percentage of revenue? Net profit margin does.

It is calculated as net income divided by revenue, usually multiplied by 100 to express the result as a percentage. A 12% margin means a company keeps 12 cents as net profit for every dollar of revenue after operating costs, interest, taxes, and other expenses.

The ratio is called “net” because it uses the bottom line rather than an earlier profit measure. Gross profit margin subtracts only the cost of goods sold, while operating profit margin generally uses operating income before interest and taxes. Net profit margin therefore captures financing, taxation, and non-operating effects as well as core operations.

Investors commonly compare a company’s margin with its own history and with similar businesses. A higher margin is not automatically better: different industries have different cost structures, leverage, and accounting policies. Revenue growth can also disguise falling margins if costs rise faster than sales.