Bill Hanna, CPAAccounting Leader Driving Financial Excellence

How CFOs looks at Revenue Growth vs Profit Margin!

29 May 2026 · 1 min

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1:18

In this Finance Byte, CPA Bill Hanna explains how chief financial officers (CFOs) assess both revenue growth rate and net profit margin when evaluating a business. He illustrates the concept with a simple numerical example: a company’s revenue rises from $1.0 M to $1.2 M (a 20% year‑over‑year growth) while its net income is $60 K, yielding a net profit margin of only 5%. Hanna emphasizes that while rapid revenue growth attracts investor attention, the profit margin reveals the true value generated per dollar of revenue. The video concludes with a call to follow the channel for more finance insights.

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CFOs focus on revenue growth rate as well as net profit margin, because you could have a business that is growing, which gets a lot of attention, but it's not keeping enough profit from every dollar that it brings in. Let's look at an example here. A company earns in prior year $1 million in revenue, this year $1.2 million, and this year's net income is $60K. Revenue growth calculation is going to be current period minus prior period revenue divided by prior period revenue. So that's going to be $1.2 million minus $1 million divided by $1 million equals 20%, which means this business is growing by 20% year over year, which gets a lot of attention from investors. But now look at net income or net profit margin. We have net income divided by revenue. Uh, net income is $60K. $1.2 million divided by current year revenue, which is $1.2 million, and that equals 5%. 5%! That means that from every dollar that we bring in, we only get to keep 5 cents. So revenue growth gets a lot of attention while net profit margin tells you the real value in the business. If you're looking for more Finance Byte, go ahead and follow the channel.