What is the net profit margin?
Net profit margin is the second financial indicator to measure a company's earning capacity, that is, the net profit after deducting costs, all expenses and corporate income tax. Gross profit can also be used to deduct sales, management and taxes.
For example, a coffee shop earns 6.5438+0 million a month. The cost of raw materials is 3000 yuan, the cost of personnel is 4000 yuan, and the advertising fee and taxes are 2000 yuan.
So the gross profit of coffee is 7000 yuan, the gross profit rate is 70%, the net profit is 1000 yuan, and the net interest rate is 10%. Are you right?
Profit margins also vary from industry to industry.
Generally speaking, the net interest rate of 10% is average, 20% is better and 5% is lower. Of course, we also need to consider the company size and industry, and it will also be affected by other factors.
What do you think of the index of net profit margin?
Generally, companies with low net profit margins are usually facing fierce price competition or doing commodities. The higher the net profit rate, the more companies with dominant market position and higher barriers can be found.
Without distinctive, competitive and differentiated products, it is difficult to maintain a high net profit margin. If we maintain a high net profit margin, it will lead to the expansion of competitors' capacity in the industry, leading to overcapacity in the future, which will lead to a decline in the overall net profit margin. Finally, a long-term supply-side reform of de-capacity will eventually reach a new balance point of net profit margin. If you find that the net profit margin is unsustainable, you need to reconsider the valuation.