Net profit margin (also known as “profit margin” or “net profit margin ratio”) is a
to calculate the percentage of profit a company produces from its total revenue. It measures the
Net profit is calculated by deducting all company expenses from its total revenue. The result of the
profit margin calculation is a percentage – for example, a 10% profit margin means for each $1 of
revenue the company earns $0.10 in net profit. Revenue represents the total sales of the company
The typical profit margin ratio of each company can be different depending on which industry the
Corporate Finance Institute
Financial Ratios
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