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as mentioned in another video a companys revenue is the amount it makes as a grand total through its various activities whereas that companys net income or net profit is the amount that actually keeps after subtracting the various expenses that are involved the bottom line if you will the net or bottom-line profit margin is simply calculated by dividing a companys net profit by the revenue the same way we calculate the gross profit margin by dividing the gross profit by the revenue the operating profit margin by dividing the operating profit by the revenue and so on lets say business a generated ten million dollars last year but was only left with a net profit of a hundred thousand dollars business B on the other hand generated five hundred thousand dollars last year and was left with a fifty thousand dollar net profit we divided a hundred thousand by ten million for business a and end up with point zero one or a net profit margin of one percent for business B fifty thousand divide
