How is the net income margin calculated?

The net income margin is a key financial metric that indicates how much profit a company makes for every dollar of revenue it generates. It is calculated by dividing net income by total revenue and then multiplying the result by 100 to express it as a percentage. This formula shows the proportion of revenue that turns into profit after all expenses have been accounted for.

Using net income in relation to total revenue demonstrates the effectiveness of a company in controlling expenses and generating profit, which is essential for evaluating financial performance. A higher net income margin implies a company is more efficient at converting revenue into actual profit.

Other choices pertain to different financial metrics. Calculating net income as a ratio to total assets measures return on assets, while showing gross profit as a percentage of revenue indicates gross margin. The subtraction of expenses from revenue and dividing that value by revenue is more aligned with calculating profit margin but does not directly represent net income margin. Therefore, the correct understanding of net income margin is encapsulated in option B.