How to Calculate Income as a Percentage of Revenue

by Michael Keenan

The net income of a company can be measured before or after taxes. Measuring a company's income as a percentage of revenue is one way to gauge how efficiently the company works - companies with higher percentages typically have lower expenses. Conversely, a company whose income represents a low percentage of revenue has higher expenses.

Step 1

Subtract the company's expenses before taxes from total revenue to find the company's net income before taxes. For example, if a company brings in $44 million and has expenses of $30 million, the company's net income before taxes is $14 million.

Step 2

Subtract the company's taxes from the net income before taxes to find the company's net income after taxes. In this example, if the company pays $8 million in taxes, the company has $6 million in net income after taxes.

Step 3

Divide the company's net income before taxes by the company's total revenue, and multiply the result by 100 to find the company's net income before taxes as a percentage of revenue. In this example, divide $14 million by $44 million, and multiply the result by 100 to find the company's net income before taxes equals 31.82 percent of revenue.

Step 4

Divide the company's net income after taxes by the company's total revenue, and multiply the result by 100 to find the company's net income after taxes as a percentage of revenue. In this example, divide $6 million by $44 million and multiply the result by 100 to find the company's net income after taxes equals 13.64 percent of revenue.

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