to calculate profit margin ratios:
Ratio (After Tax Margin Ratio) = net profit after tax / sales.
Margin Ratio = net profit before taxes / sales.
Profit Margin (Operating Margin) = net income before
interest and taxes / sales.
Margin Ratios definitions and explanations:
These three profit margin ratios state how much
profit the company makes for every dollar of
The net profit margin ratio is the most commonly
used profit margin ratio.
A low profit margin ratio indicates that low amount
of earnings, required to pay fixed costs and profits,
are generated from revenues.
A low profit margin ratio indicates
that the business is unable to control its production
The profit margin ratio provides clues to the
company's pricing, cost structure and production
The profit margin ratio is a good ratio to benchmark
The net profit margin ratio is included in
the financial statement ratio analysis spreadsheets
highlighted in the left column, which provide
formulas, definitions, calculation, charts and
explanations of each ratio.
The net profit margin ratio and operating
profit margin ratio are listed in our profitability
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