2. Net Profit Margin
Calculates the percentage of total revenue that remains as profit after all expenses, including operating costs, taxes, and interest, are deducted. A higher margin indicates a more profitable company, reflecting efficient cost management and strong revenue generation.
Example: A company has $500,000 in revenue and $100,000 in net income after all expenses. The net profit margin would be ($100,000 / $500,000) × 100 = 20%.
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