How to Calculate Income as a Percentage of Revenue

by Mark Kennan

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.

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.

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.

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.

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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