# Calculate 3 Types of Profit Margin in Excel

The **Gross Profit Margin, Operating Profit Margin, and Net Profit Margin** are all essential profitability indicators. They are frequently used to contrast the performance of the same company over time or between different companies. In this article, I will show you the processes to calculate the **Gross Profit Margin, Operating Profit Margin, **and **Net Profit Margin** in Excel.

## Introduction to the Dataset

Before starting the procedure, let’s introduce you to our dataset for this article. Here is a list of the financial statements of a company (**column A**) and the mention of their corresponding cost (**column B**).

Below the data table, I will calculate the profit margins in a separate row.

## 1. Gross Profit Margin

### What is Gross Profit Margin?

**Gross Profit Margin** is an economic ratio that calculates the percentage of profit a company makes from its total earnings. The **Gross Profit Margin** is helpful to measure a company’s financial health.

To calculate the **Gross Profit Margin**, subtract the total price of raw materials of a company from the total revenue. Then simply fractionate the result by the total revenue.

### Calculate Gross Profit Margin in Excel

Now before showing you the method, I should mention that there is no built-in function for calculating the **Gross Profit Margin** in Excel. That’s why to calculate the **Gross Profit Margin**, we are going to follow the standard equation of **Gross Profit Margin**.

**Syntax**

= (Total Revenue - Expense on Raw Materials)/ Total Revenue

**Formula**

= (B2-B3)/B2

**Usage Guide**

**Step_1**: Select an empty cell.

To enter the formula, I’ll use cell **B5**.

**Step_2**: Now type the formula in cell **B5**.

**Step_3**: Press **ENTER** to insert the formula.

**Apply Percentage**

**Step_4**: Select cell **B5**.

**Step_5**: Click on the **Home** tab.

**Step_6**: In the **Number** group, hit on the **% **button.

**Final Result > **

The **Gross Profit Margin** of our dataset is **43%**.

**Formula Explanation**

**B2**indicates the value of**Total Revenue**.**B3**denotes the total**Expenses on Raw Materials**.

## 2. Operating Profit Margin

### What is Operating Profit Margin?

**Operating Profit Margin** is a measure of profitability that measures a company’s ability to generate profits from its core operations.

To calculate the **Operating Profit Margin**, first, deduct the total cost of operating costs and raw elements from the total revenue. Then fractionate the result of subtraction by the total revenue. Finally, express the result in percentage.

### Calculate Operating Profit Margin in Excel

To calculate the **Operating Profit Margin**, only the cost of operating costs and raw elements are taken into consideration and they are subtracted from the total revenue.

**Syntax**

= (Total Revenue - Expense on Raw Materials - Operating Cost)/ Total Revenue

**Formula**

= (B2-B3-B4)/B2

**Usage Guide**

**Step_1**: Select an empty cell.

I will be using cell **B6** to insert the formula.

**Step_2**: Write the formula in cell B6.

**Step_3**: Press **ENTER**.

**Step_4**: Click on the **%** icon in the **Number** group of the **Home** tab.

**Final Result >**

Normally,** Operating Profit Margin** is represented in percentage form. So, it is best to use the percentage (**%**) here.

**Formula Explanation**

**B2**indicates the value of**Total Revenue.****B3**is the**Expenses on Raw Materials**.**B4**represents the**Operating Cost**.

## 3. Net Profit Margin

### What is Net Profit Margin?

**Net Profit Margin** expresses the amount of net income or profit generated as a percentage of revenue. The **Net Profit Margin **calculates the percentage of revenue that remains after all operating and non-operating expenses like debts, interests, and taxes, etc. have been paid.

### Calculate Net Profit Margin in Excel

The **Net Profit Margin** considers all types of expenses for its calculation.

**Syntax**

= (Total Revenue - Expenses on Raw Materials - Operating Cost - Other Expenses)/Total Revenue

**Formula**

=(B2-B3-B4-B5-B6-B7)/B2

**Usage Guide**

**Step_1**: Type the formula in an empty cell.

I’ve inserted the formula in cell **B9**.

**Step_2**: Write the formula in cell **B6**.

**Step_3**: Press **ENTER**.

**Step_4**: Now hit the **%** icon under the **Number** group of the **Home** tab.

**Final Result >**

So, you can see all types of expenses are subtracted to find the **Net Profit Margin**. Here I have to mention that, the additional expenses can vary in other cases.

**Formula Explanation**

**B2**is the inflow of money. It is the total amount of revenue.**B3, B4, B5, B6,**and**B7**are different sorts of outflow of revenue.

## Conclusion

I hope now you have a clear concept of the 3 types of profit margin calculation in Excel. I hope this article will help you to solve any sort of situation regarding profit margin. Please visit our **Blog** page for more Excel-related articles like this one. Feel free to share your thoughts about our articles in the comment section below. Thank you!

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