Net Profit Margin Ratio Calculator - Glossary:
Net Profit Margin: Shows the proportion of Sales to Net Income. In simple words, it is expressed in terms of percentage. It helps to measure how much net profit was made from its earnings.
How to use this equation?This is an income statement component; the values are commonly stated against net income and net sales (earnings). To use this ratio, divide the net income with net sales.
Total sales less returns and bad debts.
Profit left over after deducting all its expenses (cost of goods, operational expenses, interest cost, depreciation cost, taxes and if any dividend paid).
Net profit margin for a company with a net sales income of $100,000 and net income of $10,000 is 10%. It means the company has a net income of $0.10 for each dollar it generated, or we can say that, company converted 10% of its sales into profits.