Net Profit Margin

Net profit margin is the bottom line. It looks at a company’s net income and divides it into total
revenue. It provides the final picture of how profitable a company is after all expenses, including
interest and taxes, have been taken into account. A reason to use the net profit margin as a measure
of profitability is that it takes everything into account. A drawback of this metric is that it includes a
lot of “noise” such as one-time expenses and gains, which makes it harder to compare a company’s
performance with its competitors.