Net margin is a company’s net profit divided by its revenue, expressed as a percentage. Unlike gross margin, it accounts for every cost the company incurs — operating expenses, interest, and tax — showing what actually reaches the bottom line for each ringgit of sales.
For example, a company with RM10 million in revenue and RM800,000 in net profit has a net margin of 8% — after all costs are deducted, it keeps 8 sen of every ringgit in sales as final profit.
Net margin is useful for comparing overall profitability across companies of different sizes, and tracking it over time can reveal whether cost control or pricing is improving or deteriorating. A widening gap between gross margin and net margin over several quarters is often a sign that overhead or financing costs are eating into profitability even if sales look healthy.