What is the Net Income Ratio?
The Net Income Ratio measures how effective your organization is at generating profit on each dollar of earned premium. This KPI is used to measure the profitability of your organization and is primarily used for internal comparison.
If you have established industry benchmarks and strong knowledge of your competitors, this KPI can also be used to compare your business to others in the same space. Th Net Income Ratio KPI can be used to gauge future pricing policies.
Net Income Ratio Formula
Net Income Ratio = (Net Income / Total Revenue) x 100
By expressing the result as a percentage, the net income ratio provides insight into how much of each dollar in revenue is converted into profit, helping evaluate a company's efficiency and financial performance.
See also: Financial KPIs and Ratios.