Net Profit Margin = Net Profit/ Sales Revenue X 100
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Formula to calculate the ratio
It is 100*profit/costs.
Total Profit = Total Revenue minus Total Costs.
The word net has many definitions. The most common one used in maths is the idea of net growth or net profit. It means the final value of something once everything has been taken into account. With money, the net profit is the money you make, once all costs have been taken into account. Say I buy a games console for £90, get the bus into town for £3 and then sell it to you for £120. The £120 I now have isn't all profit. I gain £120 when you buy the console from me, but we have to bear in mind I had to pay out £90 to buy it and £3 for the bus. So my NET profit is £27, which is the amount I have made, including al my costs.