How To Find Out Net Profit Ratio

How To Find Out Net Profit Ratio When it is shown in percentage form it is known as net profit margin The formula of net profit margin can be written as follows Examples of net profit ratio Let s first illustrate the calculation of net profit ratio through a couple of examples and then proceed to its significance and interpretation Example 1

For gross profit gross margin percentage and mark up percentage see the Margin Calculator Profit Margin Formula Net Profit Margin Net Profit Revenue Where Net Profit Revenue Cost Profit percentage is similar to markup percentage when you calculate gross margin This is the percentage of the cost that you get as profit on top of Net sales or revenue was 90 8 billion highlighted in blue Net income was 23 6 billion for the period highlighted in green Apple s net profit margin is calculated by dividing its net

How To Find Out Net Profit Ratio

How To Find Out Net Profit Ratio
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Profit Margin
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Earning And Profit Computation
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The formula is Net Profit Ratio Net Profit Net Sales x 100 However to find this out we need to find out the net sales of the company The formula for this is Net Sales Sales Returns 10 00 000 5 00 000 Rs 5 00 000 Next is finding out Net Profit the formula for which is Net Profit Operating Profit Direct Cost Video Explanation of Net Profit Margin Below is a video explanation from CFI s Financial Analysis Fundamentals Course of how net profit margin is calculated and what it means when analyzing a company s performance Get more video tutorials in CFI s Financial Analyst Training Program Understanding the Ratio The net profit margin ratio is used to describe a company s ability to

By dividing net income by revenue in the corresponding period the net profit ratio comes out to be approximately 10 0 in 2021 Net Profit Ratio 2021A 23 million 225 million 10 0 In the next step we ll repeat the process for the fiscal year ending 2022 where the net revenue is 250 million while the net income is 30 million How to Calculate the Net Profit Ratio The formula for the net profit ratio is to divide net profit by net sales and then multiply by 100 The formula is Net profit Net sales x 100 The measure could be modified for use by a nonprofit entity if the change in net assets were to be used in the formula instead of net profit

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It shows the ratio of a net profit to its total revenue It measures the value of net profit a company obtains per dollar of revenue collected The higher the net profit margin the more profitable the business is Using the above example in net profit let us calculate the net profit margin of ABC Retail 21 000 100 000 x 100 21 If we divide each net income figure by the revenue amount we arrive at the net profit margin for all three companies For instance if we divide Company A s net income by its revenue we get the following Net Profit Margin 7m 100m 07 or 7 0 3 Net Profit Margin Ratio Analysis

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