What is net profit margin?
The net profit margin tells you if the money you earn is enough to pay for your expenses. Net profit margin is calculated by taking your net profit and dividing it by total revenue and then multiplying it by 100. This will give you a percentage number called the net profit margin, so if your Net Profit Margin is 20% — which means for every R1 you earn, you keep 20c as actual profit.
Total Revenue
In the above description, Total Revenue is all the money your business earns from selling products or services — before taking away any costs or expenses.
Think of it as your full income.
Example:
You run a bakery and make R50,000 from selling bread, cakes, and pies in one month.
That R50,000 is your total revenue.
Net Profit
This is what’s left over after paying all your expenses — like rent, salaries, electricity, ingredients, transport, etc.
It’s your actual take-home profit.
Example:
If you earned R50,000 but spent R40,000 on expenses,
your net profit is R10,000.