Chapter 8
Net profit margin
- Why: To better understand your financial performance, especially how well a company is run and controls its costs
- What: To measure the percentage of net profits from the overall sales revenues
- When: When investors and managers want to understand and compare the profitability of businesses
- The question this indicator helps you to answer: how much net profit are we generating for each dollar of revenue generated?
Why does this KPI matter?
With the previous KPI we looked at net profit as a total number. In order to make net profits more comparable and to understand how much profit a company makes for each dollar in revenue, we can produce the net profit margin (also referred to as return on sales or net income margin), ...
Get 25 Need-To-Know Key Performance Indicators now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
