Gross ↔ Net Profit Converter
Convert between gross profit, operating profit, and net profit — understand how much of every rupee of revenue actually reaches the bottom line.
Revenue waterfall — where the money goes
The P&L Waterfall — Understanding Each Profit Layer
Revenue → subtract COGS = Gross Profit. Subtract operating expenses = EBIT (operating profit). Add back D&A = EBITDA. Subtract interest = EBT. Subtract taxes = Net Profit (PAT — Profit After Tax). Each layer tells a different story: gross margin reveals pricing power and production efficiency; EBITDA is the operating cash proxy; net margin is what the business actually keeps.
For a SaaS business, gross margins of 70–80% are typical. For manufacturing, 20–40% is normal. Always compare margins within the same industry.
Gross Margin % = Gross Profit / Revenue × 100
EBITDA = Gross Profit − OpEx
EBIT = EBITDA − D&A
EBT = EBIT − Interest
Net Profit = EBT × (1 − Tax Rate)
Net Profit Margin = Net Profit / Revenue × 100
💡 What This Means for You
If you’re analysing a company to invest in, focus on net profit margin trends over 3–5 years. A rising net margin signals improving operational leverage. A falling net margin despite growing revenue may signal rising costs or pricing pressure. For your own business, aim to understand which cost line is your biggest lever for improvement.
Analyse business profitability deeper
Use our ROI Calculator to evaluate return on any business investment.