Calculating net profit margin ratio for publicly traded and privately held companies. Accouting, investments, and finance.

Comments

Posting comment...

Premium member

Presentation Transcript

Measuring Profitability of a Company – Net Profit Margin:

Measuring Profitability of a Company – Net Profit Margin Julia Westlake, MAEd , MBA

Profits and Companies:

Profits and Companies

How do We Measure Profitability?:

How do We Measure Profitability? Net Profit Margin Return on Assets Return on Equity or Return on Investment

Net Profit Margin:

Net Profit Margin After cost margin of profits How effectively the company is controlling costs to maximize profits We look for industry appropriate high numbers – they indicate better performance

Net Profit Margin Formula:

Net Profit Margin Formula Net Profit Margin = Net Profit After Taxes Total Revenues

Where to Find the Info:

Where to Find the Info

Solve it!:

Solve it! Step 1: Identify the formula. Net Profit Margin = Net Profit After Taxes ÷ Total Revenues

Solve it! :

Solve it! Step 2: Fill the formula in with the values. Net Profit Margin = Net Profit After Taxes Total Revenues Net Profit Margin = $5,503,100 $27,006,000

Solve it!:

Solve it! Step 3: Solve it. Net Profit Margin = $5,503,100 $27,006,000 0.20 or 20%

Solve it!:

Solve it! Step 4: Figure out what it means. For every $1.00 this company spent, it retains 20% which is 20-cents for profit Company is healthy Compare to another company in the same industry or a competitor to place in perspective Competitor comes in at 0.10 or 10% Means this company is doing an excellent job making profits!

Net Profit Margin:

Net Profit Margin Measure of profitability Information is found on the Income Statement Net Profit After Taxes ÷ Total Revenues Look for industry appropriate high ratios

You do not have the permission to view this presentation. In order to view it, please
contact the author of the presentation.

Send to Blogs and Networks

Processing ....

Premium member

Use HTTPs

HTTPS (Hypertext Transfer Protocol Secure) is a protocol used by Web servers to transfer and display Web content securely. Most web browsers block content or generate a “mixed content” warning when users access web pages via HTTPS that contain embedded content loaded via HTTP. To prevent users from facing this, Use HTTPS option.