What does a net profit margin of 10% mean?
Asked 4 years ago
Hi guys. I found an example of a business with a net profit margin of 10%. Can you please remind me what the net part means again? I'm always getting it mixed up! Is it what is left after deductions, and gross before decutions? How would I calculate it into a percentage? Oh, and is 10% good or bad?
Scottie Gordon
Thursday, February 10, 2022
The net profit margin is the percentage of profit a company gets from its total revenue. Its formula is;
Net profit margin= Net profit/ revenue *100
A 10% net profit margin means that for every $1 of revenue the company earns $0.10. This means if a company's revenue is $20,000 and its net profit margin is 10%. Then the company gets a profit of $2,000.
Cody Sanders
Monday, September 26, 2022
A net profit margin is an indicator of a company's overall succes. A high NPM means that a company can effectively control its costs. While a low NPM means that a company uses an ineffective cost structure or poor pricing strategy.
It will depend on the type of industry you're in to known if a 10% net profit margin is good or bad.
Please follow our Community Guidelines
Related Articles
How to Bundle WooCommerce Products to Maximize Your Profits
Ashley Stander
November 11, 2022
How to View WooCommerce Sales Report by Payment Method
Rob Elgar
November 25, 2022
5 Easy Ways to Calculate Shipping Cost to Sales Ratio
Rosana Antoni
June 9, 2023
Related Posts
Ashley Stander
Gross Profit vs. Gross Margin: How Do They Differ?
Can't find what you're looking for?