In this video on Net Profit Margin Ratio, we discuss the formula to calculate Net Profit Margin Ratio with some practical examples.

𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐑𝐚𝐭𝐢𝐨
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Net profit margin Formula is a profitability ratio. Investors use net profit margin ratio to find out how much percentage of net profit a firm has earned at the end of the year.

𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Net Profit Margin = Net Profit / Net Sales x 100

𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐄𝐱𝐚𝐦𝐩𝐥𝐞
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NGO Company has the following information –

Gross Sales – $350,000
Sales Return – $6000
Net Profit for the year – $40,000

Find out the net margin ratio of NGO.

As, we know the gross sales, i.e. $350,000.

The sales return is $6000.

The net sales is = (Gross Sales – Sales Return) = ($350,000 – $6000) = $344000

Here the net profit is also given = $40,000.

Using the formula of net margin, we get –

Net Margin Formula = Net Profit / Net Sales * 100

Net Margin = $40,000 / $344,000 * 100 = 11.63%.

To know more about 𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐅𝐨𝐫𝐦𝐮𝐥𝐚, you can go to this link here: [ Ссылка ]

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