Definition: What is Net Profit Margin?
Net profit Margin also called Net Margin. It is the profitability matric which shows how much a business make net income from each dollar of sales.
Investors use Net margin to find that how efficiently a business is managed and forecast future profitability based on sale forecast of management.
Investors can find the percentage of revenue which uses for paying the operating and nonoperating expenses of the business by comparing the net income to total sales.
Through this investors find the leftover amount of revenue which company may use to pay shareholders or reinvest in the business.
As compared to low margin, the higher margin is better because due to high margin company translate more of its sales into a profit.
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