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Net Profit Margin
Business
WHAT IS IT?
Net profit margin is net profit expressed as a percentage of sales.
IN PLAIN ENGLISH
It tells you how much of each £1 of sales remains as net profit after the costs included in the calculation.
SIMPLE EXAMPLE
If a business has £100,000 of sales and £10,000 net profit, its net profit margin is 10%.
WHY DOES IT MATTER
Net margin helps put sales into context and can show why an increase in sales does not automatically produce the same increase in profit.
THE ROCKET TEST
Net profit margin is the percentage of sales left as net profit after relevant costs.
SEE IT IN ACTION
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