I am new to investing an have looked a few videos on evaluation company finances. I am now trying to apply this knowledge to an example company, Microsoft.

On the key statistics page it says that the Operating Margin 42.56% and (net) Profit Margin is 37.63%

Let’s try to calculate these values with the income statement items on this page, first the Operating Margin:

Gross Profit:

total revenue	192’557’000
cost of revenue (COGS)	60’212’000
Gross Profit	192’557’000 – 60’212’000 = 132’345’000

Operating Expenses:

Selling General and Administrative Costs	27’051’000
R&D	23’350’000
Operating Expenses	27’051’000 + 23’350’000 = 50’401’000

So:

So far so good. But I am having trouble getting to the net profit margin. I have learned that:

• Net Profit Margin = (Net Income / Revenue) * 100%

• Net Income = Total Revenue – (COGS + selling, general and administrative costs + operating expenses + depreciation + interest + taxes + other expenses)

So (line items coming from Yahoo! Finance Income Statement):

COGS	60’212’000
Selling General and Administrative Costs	27’051’000
Operating Expenses	50’401’000 (see above)
Depreciation	13’825’000
Interest Expense	2’120’000
Tax Provision	10’178’000
Other Expenses (I don’t see any listed)	0
Total Expenses	136’736’000

So:

But according to Yahoo! the Net Profit Margin = 37.63%. From this I derive that the Total Expenses according to Yahoo! are 72’456’000 (because (72456000 / 192’557’000) * 100% = 37.63%)

My question is: what am I doing wrong? My calculated Net Income is (72’456’000 – 55’821’000) 16’635’000 too low, but I cannot find any other line items that add up to 16’635’000.

Can someone show me, based on the line items on Yahoo! Finance how I can correctly calculate the Net Profit Margin? Any help is greatly appreciated!