Net Profit Margin Examples Help

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Are you looking for net profit margin examples for understanding net profit margin and complete your assignments and projects? Then this is the right place for you. We provide many net profit margins examples by which you can complete your project and assignments work easily.
 

What is net profit?

 

Net profit margin is basically the ratio between the net profit of the company and the revenue of the company. For calculating net profit margin, net profit is computed by deducting all direct and indirect expenses by total revenue of the company. Net profit is also known as net earnings or net income. Net profit margin is expressed in percentages. It is calculated with the help of income statement of the year. The net profit margin is intended to be a measure of the overall success of the company or business. A high net profit margin is the symbol of excellent growth of the business entity. The success of a business depends upon its net profit margin percentage.
 

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Formula for computing net profit margin

 

For computing net profit margin given formula is used-
 

Net profit margin= net profit / revenue
Or
Net profit margin = net income / net sales
 

Example of net profit margin

 

EXAMPLE: The net profit of a company for the financial year 2015-16 was $500000 and the net sale by the company for the following year is recorded as $3000000. Calculate the net profit margin percentage of the company for the year 2015-16.
 

SOLUTION: Net profit margin = net profit/ net sales = $500000/$3000000 = 0.16 or 16 %.
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