Net Profit ratio
Net Profit Ratio means final balance of operating and non operating incomes after meeting all expenses i.e., both operating or non operating. This ratio helps in determining the efficiency with which affairs of the business are being managed. The ratio is an effective measures to check the profitability of the company.
Net Profit Ratio =
Net operating profit / Net sales * 100
Net operating profit is arrived at by deducting operating expenses from gross profit. This ratios indicate net margin earned on a sales of Rs.100/-.
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