Is profit margin the same as net profit margin?

Question

I'm quite confused by these two terms because different websites define them differently.

Answer 1

Based on my experience profit margin and net profit margin are different. You have to ask yourself "net of what" It is typically net of taxes. Profit margin is a pre-tax concept and net profit margin is an after-tax concept.

Answer 2

You can have a gross profit and a net profit. The gross profit is calculated by subtracting the cost of sales from revenue. This figure will be higher than the net profit.

To calculate the net profit you add all the direct overheads such as wages, rent, utilities and then subtract this amount from the gross profit.

The calculations required for audited accounts can be more complicated. For instance in manufacturing you will also have to take into account indirect overheads, which will also have to subtracted from the initial gross profit.

Hope this helps.