NET PROFTI MARGIN

Question 1

WHERE IS IT FOUND

Answer 1

INCOME STATEMETN

Question 2

formula

Answer 2

netprofit/ revenue * 100

Question 3

if my net profit margin is 12.5% what does tis mean

Answer 3

for every £ of sales 12.5p is net profit

Question 4

the higher the net profit q

Answer 4

the better

Question 5

net profit hsowd

Answer 5

how good bs is at converting cash into profit

Question 6

how does net profti amrgin inform mnager

Answer 6

informing them of previous NPM/TRENDS

Copmare net profit amrgin t rivals and industry avgs

Question 7

exaplin how informing managers of preious NPM is benefiical

Answer 7

compare NPM to previous years to see if +/- trend if negative establish issue and then can fix it

Question 8

exdaplin how comparing net profit margins to rivals/industry avg is beenficial

Answer 8

if see theirs is high you can see what they’re doing better and what you need to replicate if possible and appropriate

Question 9

why arenet proft margins considered big boys

Answer 9

looks at everything in terms of costs

-direct , indirect , tax , ir from loans

whihc are all importnat

Question 10

net profit helpsuis undersrand

Answer 10

overall profit

Question 11

NP always lower than GPM becasue

Answer 11

at bottom of Y statement

Question 12

useful for two diff stkh who ar ethey and why

Answer 12

managers - comparing to rpevious years abnd indsutry to see if need to implemet new startegies or lpans

sh - potential SH looking to invest in bs in certain industry could look at NPM of bs in industry ,whichever highest could be the judgement so want yours to be best