Net Profit Margin
The Net Profit Margin is a profitability ratio calculated as net income divided by revenue, indicating how much of each dollar earned is profit.
Benefits
Net profit margin provides insight into a company’s profitability, helps compare performance with industry peers, and informs strategic financial decisions.
Frequently Asked Questions
Is 30% a good net profit margin?
Yes, a 30% net profit margin is considered very good and indicates strong profitability.
Is 20% a good net profit margin?
Yes, a 20% net profit margin is generally considered good and reflects healthy profitability.
Is a net profit margin of 7% good?
A 7% net profit margin is decent and can be considered good, depending on the industry standards.
Key Takeaway
The net profit margin is a crucial metric for evaluating a company`s profitability, helping businesses understand how much profit they retain from their total revenue.