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POST ONAPRIL 28, 2021 If you ne an indicator to calculate the percentage of profit that your company produces with respect to its total income, you should monitor the net profit margin . This is a great indicator of a company’s financial health, in part cause it takes into account all business activities. By tracking this type of information, you can see what’s working and what’s not, and forecast future profit bas on revenue. Let’s learn more about its characteristics and the advantages of knowing your net margin. What is net profit margin.

What is net profit margin

The Net Profit Margin is one of the examples of financial KPIs , and it is us to measure the amount of profit that a company obtains for each dollar obtain. This measure reveals the Peru Phone Number List amount of profit a business can extract from its total sales. This measurement is typically made for a standard reporting period, such as a month, quarter, or year. The net profit margin is intend to a measure of the overall success of a company. A high net margin indicates that the company correctly prices its products and exercises good cost control.

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Use this indicator if

You want to compare the results of companies in the same industry, as they are all subject to the same business environment. Customer base, and may have roughly the same DP Leads cost structures. A net profit margin greater than 10% is generally consider excellent. Although it depends on the industry and the structure of the company. When us in conjunction with gross profit margin, you can analyze the amount of total expenses associat with selling, general, and administrative expenses (found on the income statement tween the gross margin and net profit line items). Net Profit Margin Formula The formula that you must use to know this data is the following: Net Profit Margin Net profit is calculat by ducting all company expenses from its total revenue.