After-tax profit margin

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After-tax profit margin

The ratio of net income to net sales.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

After-Tax Profit Margin

A measure of how well a company controls its costs after taxes. It is calculated by dividing the company's net income (profit after taxes) by its net sales. A high after-tax profit margin often means the company controls its costs well and provides a value for the shareholder's investment. However, a low after-tax profit margin is not necessarily a negative sign. Some companies and industries are expensive to run and have low margins by their nature, relying on sheer volume to generate profits. However, a high after-tax profit margin is generally seen as better if it is at all feasible.
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