net profit margin

The percentage of revenues that realized income represents after all business expenses—cost of goods sold plus operational, administrative, financing and tax expenses—have been accounted for. Net profit is the “bottom line” that garners most of the attention in discussions of a company’s profitability. The net profit margin (net margin) is calculated as net income after taxes divided by sales. A consistently high net margin is often indicative of a company with one or more competitive advantages. Furthermore, a high net margin provides a company with a cushion during downturns in its business.