Calculator Inputs
Example Data Table
| Scenario | Revenue | Total Cost | Net Profit | Net Profit Ratio |
|---|---|---|---|---|
| Starter Case | $12,000.00 | $9,300.00 | $2,430.00 | 20.25% |
| Growth Case | $22,000.00 | $16,800.00 | $4,796.00 | 21.80% |
| Tight Margin Case | $15,000.00 | $13,600.00 | $1,190.00 | 7.93% |
Formula Used
Gross Profit = Revenue − Cost of Goods Sold
Operating Profit = Revenue − Cost of Goods Sold − Operating Expenses
Profit Before Tax = Revenue + Other Income − Total Expenses
Tax Amount = Profit Before Tax × Tax Rate, only when profit is positive
Net Profit = Profit Before Tax − Tax Amount
Net Profit Ratio = (Net Profit ÷ Revenue) × 100
Gross Margin = (Gross Profit ÷ Revenue) × 100
Operating Margin = (Operating Profit ÷ Revenue) × 100
Expense Ratio = (Total Expenses ÷ Revenue) × 100
Markup on Cost = (Net Profit ÷ Total Expenses) × 100
Return on Capital = (Net Profit ÷ Capital Employed) × 100
Profit per Unit = Net Profit ÷ Units Sold
Contribution Margin Ratio = ((Revenue − Cost of Goods Sold) ÷ Revenue) × 100
Break-Even Sales = Fixed Overheads ÷ Contribution Margin Ratio as a decimal
Margin of Safety = Revenue − Break-Even Sales
How to Use This Calculator
- Enter total revenue for the period you want to analyze.
- Add direct costs in cost of goods sold and overheads in operating expenses.
- Include other expenses, other income, and tax rate for a fuller profitability picture.
- Optionally enter units sold, capital employed, and a target profit ratio.
- Choose your currency and decimal precision, then click the calculate button.
- Review the result cards, graph, target gap, and export the summary as CSV or PDF.
FAQs
1. What does profit ratio mean?
Profit ratio shows how much profit remains from revenue after costs and taxes. It helps compare profitability across products, periods, or business models using a standardized percentage.
2. Is profit ratio the same as markup?
No. Profit ratio usually measures profit against revenue, while markup measures profit against cost. Both are useful, but they answer different pricing and performance questions.
3. Can the calculator show a negative ratio?
Yes. A negative result means the business produced a loss for the selected period. This often happens when costs and taxes exceed total earned income.
4. Why include tax in the calculation?
Tax changes the final profit available to owners or investors. Including it gives a more realistic after-tax profit ratio for planning, reporting, and decision-making.
5. What does break-even sales tell me?
Break-even sales estimate the revenue needed to cover fixed overheads using the contribution margin. It helps test risk, safety margin, and minimum sales targets.
6. Why separate other income from revenue?
Other income may not come from core selling activity. Keeping it separate lets you evaluate operating profitability while still seeing total profit after all inflows.
7. How should I read the target gap?
Target gap compares your calculated net profit ratio with the benchmark you entered. Positive values mean performance is above target, while negative values show a shortfall.
8. Is profit ratio enough for full analysis?
No. Use it with cash flow, return on capital, gross margin, and trend analysis. A single ratio is useful, but full decisions need broader context.