What is Net Profit Margin?
The Net Profit Margin KPI measures how effective your business is at generating profit on each dollar of revenue you bring in. This financial KPI is a measure of the profitability of your business and is instrumental in making long- and short-term financial decisions.
Understanding this KPI may even give you an advantage in a pricing war with your competitors.
See also: Gross Profit Margin.
Net Profit Margin Formula
Net profit margin = Net Income / Total revenue
Note: Net income and total revenue can be found on the income statement.
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