The net profit rate of sales is the percentage of net profit to sales revenue. The calculation formula is: net profit rate of sales = (net profit/sales revenue) × 100%. It is directly proportional to net profit and inversely proportional to sales revenue. While increasing sales revenue, enterprises must obtain more net profit accordingly, so that the net profit rate of sales will remain unchanged or be improved. By analyzing the fluctuation of net profit rate of sales, enterprises can improve their management level and profitability while expanding sales.
Operating profit margin is the percentage of operating profit to sales revenue. The calculation formula is: operating profit rate = (operating profit/sales revenue) × 100%. It can better describe the contribution of the company's main business to profits than the net profit rate of sales, because net profit is based on operating profit plus investment income, subsidy income and net non-operating expenses, and these gains or losses are unsustainable. Excluding these influences can better reflect the changes in the profitability of companies and the differences in profitability of different companies.
Calculation formula of income statement:
1. Operating profit = main business income-main business cost-main business tax and surcharge+other business income-other business expenses-operating (sales) expenses-management expenses-financial expenses.
2. Total profit = operating profit+subsidy income+non-operating income-non-operating expenditure.
3. Net profit = total profit-income tax