What Is The Net Profit Margin? How Do Investors Use It?
The net profit margin (NPM) or income to revenue, is a metric that tells the investor how much of revenue ended as income (and therefore wasn’t spent on expenses) for the observed period. It is calculated by dividing income for the period by the total revenue earned. The higher this margin is, the more efficient a company’s business model is.
For example, if a company had $100 in revenue and earned $10 in income that period, the NPM would be 10% ($10 / $100 is .1 which, taken as a percentage, is 10%).
Read more on investopedia here.
Published: 6/03/2021
