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Home > Finance > Question

What does Net Profit Margin indicate:

0
A) Total sales
B) Total assets efficiency
C) Profitability
D) Cash available

Correct Answer: C) Profitability

• The Net Profit Margin is an essential financial ratio that primarily indicates overall corporate Profitability. • It is mathematically calculated by strictly dividing Net Profit by the firm's Total Sales. • The ability of a business to easily pay off its short-term maturing debts is called Liquidity. • The ratio measuring how efficiently a firm uses its total assets to generate sales is Asset Turnover. • A highly dropping net profit margin usually indicates rising Operating expenses.

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