net profit margin investment & finance definition
A
calculation that shows how profitable a company is after paying income taxes.
Divide net income by net sales to arrive at the net profit margin, which is
expressed in percentage terms. Typical net profit margins vary substantially
between industries. The ratio is based upon sales and earnings from continuing
operations, not discontinued operations, because the point of the calculation
is to provide insight about future activity.
See net profit margin in Wall Street Words
Aftertax net income divided by net sales, a measure of management's ability to carry a dollar of sales down to the bottom line for the stockholders. In other words, net profit margin refers to that which is left for the owners from a dollar of sales after all expenses and taxes have been paid. Also called
net margin. Compare
gross profit margin,
return on sales.
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