Net profit margin
In one sentenceNet profit divided by net sales, showing what is left of each riyal of sales after all expenses.
Simply put
This is the final number: of every riyal that comes in from sales, how much is left for you after the cost of goods, salaries, rent, interest, Zakat and everything else.
Compare it with the gross profit margin: if the gross margin is good and the net margin is weak, the problem is in operating expenses or financing, not in pricing.
Worked example
A restaurant made net sales of 1,000,000 SAR in the year, and after all expenses and Zakat it was left with a net profit of 80,000 SAR.
Net sales1,000,000 SAR
Net profit80,000 SAR
Margin = 80,000 ÷ 1,000,0008%
Formula: Net profit ÷ net sales
Don't confuse it with
Gross profit marginThe gross margin deducts only the cost of goods, and the net margin deducts all expenses.
in FullScreen ERP
The income statement in the final statements gives you net sales and net profit directly. General accounts