key term - Net profit margin

Definition

Net profit margin is a financial metric that represents the percentage of revenue remaining as profit after all expenses, taxes, and costs have been subtracted from total sales. It measures how effectively a company converts its revenue into profit.

Related terms

Revenue:

The total amount of money generated by the sale of goods or services before any expenses are subtracted.

Operating Expenses:

All necessary expenditures that are incurred during normal business operations, excluding costs related to producing goods or services.

Gross Profit Margin:

A financial metric that indicates the percentage of revenue that exceeds the cost of goods sold (COGS), reflecting how efficiently a company uses labor and supplies in production