**Instructions: **Use this calculator to find the OPM, GPM, and NPM of a company. Please input the desired values in the form below:

Following are key definitions of OPM, GPM, and NPM.

## Definition of gross profit margin (GPM) finance

Gross profit margin (GPM) is calculated as gross profit divided by the revenue. This means how much a firm has earned in revenue after deducting the cost of goods sold (COGS). A higher the GPM means more profitability than a lower gross profit margin.

When a company has a competitive advantage in terms of price, product quality, and cost it means each item sold will return more. Thus, this will increase the firm ability to generate more profitability.

## Definition of operating profit margin (OPM) finance

OPM operating profit margin is calculated as operating profit divided by revenue. Higher OPM means more profitability than a lower operating profit margin. The operating profit is measured by subtracting all operating expenses from the gross profit amount.

## Definition of **net profit margin** (NPM) finance

Net profit is the remaining amount after subtracting all the operating expenses, interest, and taxes which illustrates the remaining amount left in the revenue in a given period. To calculate the net profit margin (NPM); the value of net income is divided by the revenue.

## Conclusion

Profitability ratios are measured by using a firm’s profit and loss account or income statement. These are key ratios used to evaluate the firm profitability such as net profit margin (NPM); operating profit margin (OPM) and gross profit margin (GPM). This provides the basic financial analysis of the firm’s ability to turn its sales into profitability.