# Net_profit_margin_presentation

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Category: Education

## Presentation Description

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

## 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