Thursday 3 January 2019

Net Profit Margin (NPM) | NPM Formula

Net Profit Margin (NPM)

A Net Profit Margin (NPM) or in the language of Indonesia is called the margin of profitability ratios net income is used to measure the percentage of net profit on a company against some white garment sales. This net profit margin shows the proportion of sales remaining after deducting all costs related. Net Profit Margin is often referred to with the Profit Margin Ratio (ratio of Profit Margin).

For investors, the net profit Margin or Net Profit Margin is normally used to measure how efficient management to manage its business and also predict future profitability based on forecasting of sales made by his management. By comparing the net income by total sales, investors can see what percentage of income used to pay for operating costs and the costs of non-operational as well as what percentage of the remaining that can pay dividends to the shareholders or invested back into the company.

The Formula Net Profit Margin (Net Profit Margin)

Net Profit Margin this Ratio can be calculated by dividing net income by the total sales. The following is the formula Net Profit Margin:

Net income margin = net profit after Taxes/net sales Revenue

Net Profit Margin = Net Profit / Net Sales

Example of Calculation of the Net Profit Margin (Net Profit Margin)

Based on the report as per December 31, 2016, net sales Revenue (Net Sales). While the net profit after tax (Net Profit) company.


Net sales revenue (Net Sales): $ 27,063,310,000,000.
Net profit after tax (Net Profit after Tax): $ 2,064,650,000,000
the net profit Margin (Net Profit Margin):??


Net income margin = net profit after Taxes/net sales Revenue

Net profit margin = $. 2,064,650,000,000,-/27,063,310,000,000, until $.
net profit Margin = 7.63%

So the Margin net profit is of 7.63%.

Analysis and assessment of the Net Profit Margin (net profit Margin)

The purpose of the calculation of the net profit Margin is to measure the overall success of a company's business. Net profit margin (Net Profit Margin) high indicates the company set the price of its products properly and successfully controlling costs as well.

Net Profit Margin this ratio will be very useful when comparing the profitability of competitors in the same industry. Because it has the business environment and the same customer base. As well as having almost the same cost structure.

Generally, although depending on the type of industry and its business structure, net profit Margin or Net Profit Margin (NPM) and percentage of more than 10% have already considered very good.

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