How to Calculate Net Profit Margin

In this video, we explain how to calculate the Net Profit Margin, a key financial metric that indicates how profitable a business is. By analyzing the last item on the income statement—net income—and dividing it by sales revenue, you can determine how much net earnings are generated for every dollar of revenue. We'll walk you through the formula, explain what a high or low net profit margin means, and discuss why this ratio is crucial for assessing a company's financial health.

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