Definition
Net profit margin shows the percentage of revenue that becomes profit after all expenses including interest and taxes. It's the most comprehensive profitability ratio. Low margins can still generate strong returns with high asset turnover (DuPont analysis).
Formula
Net Profit Margin = Net Income / Revenue × 100%
Example
A company with $100M revenue and $12M net income has 12% net margin. Tech companies often achieve 20-30%; grocery stores may operate at 2-3%.
FAQ
What is Net Profit Margin?
Net income as a percentage of revenue.
How do you calculate Net Profit Margin?
A common formula for Net Profit Margin is: Net Profit Margin = Net Income / Revenue × 100%
Why is Net Profit Margin important?
Net Profit Margin helps investors evaluate profitability and make more informed decisions.