What is the appropriate net profit rate?

The net profit rate of industrial enterprises is different in different industries, different products and different places. Usually 5%-20%. Relatively speaking, less than 3% is the low profit rate of an enterprise or industry, and more than 10% is the high profit rate. Operating profit margin refers to the ratio of operating profit to operating income of an enterprise. It is an index to measure the operating efficiency of an enterprise, and reflects the ability of enterprise managers to obtain profits through operation while considering the operating costs. The net profit rate, also known as the net profit rate of sales, is an important indicator reflecting the company's profitability, which is the profit rate after deducting all costs, expenses and corporate income tax. The amount of net profit depends on two factors: one is the total profit, and the other is the income tax rate.

What is the net profit margin:

1. The net profit rate, also known as the net profit rate of sales, is an important indicator reflecting the company's profitability. It is the profit rate after deducting all costs, expenses and corporate income tax. The amount of net profit depends on two factors: one is the total profit, and the other is the income tax rate.

2. The corporate income tax rate is legal. The higher the income tax rate, the less the net profit. There are two income tax rates in China. One is the income tax rate of 25% for general enterprises, that is, 25% of the total profits should be turned over to the state finance as tax; The other is the preferential tax rate for foreign-funded enterprises and some high-tech enterprises, and the income tax rate is 15%. When the operating conditions of enterprises are equivalent, the enterprises with lower income tax rate have better operating benefits.

3. Only paying attention to the absolute increase or decrease of net profit is not enough to reflect the change of the company's profitability, but also needs to be combined with the change of the main business income. For example, if the growth rate of main business income is faster than the growth rate of net profit, the company's net profit rate will decline, indicating that the company's profitability is declining. On the contrary, if the growth rate of net profit is faster than income, the net profit rate will increase, indicating that the company's profitability is increasing. So the net profit rate is more telling than the net profit. However, if there are a large number of non-recurring gains and losses, non-main income and income tax changes in the net profit, the quality of this net profit rate will decline and cannot fully reflect the profitability of the company's business. At this time, the operating profit rate or EBITDA profit rate is a good indicator.