Net Profit Margin

Net profit margin

Net income divided by sales; the amount of each sales dollar left over after all expenses have been paid.

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net profit margin

Aftertax net income divided by net sales, a measure of management's ability to carry a dollar of sales down to the bottom line for the stockholders. In other words, net profit margin refers to that which is left for the owners from a dollar of sales after all expenses and taxes have been paid. Also called net margin. Compare gross profit margin, return on sales.

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Net Profit Margin

A measure of how well a company controls its costs. It is calculated by dividing a company's profit by its revenues and expressing the result as a percentage. The higher the net profit margin is, the better the company is thought to control costs. Investors use the net profit margin to compare companies in the same industry and well as between industries to determine what are the most profitable.