Profit margin on sales

Profit margin on sales Net profit after taxes/sales 5-8%... 

Another measure is the profit margin on sales, which is calculated by dividing the net profit after taxes by the net sales, expressed as a percentage. Industry averages vary, but 5% is a reasonable figure. 

The profit margin on sales, also called return on sales or net profit margin, is an important foundational concept. Looking at the equation, remember that net income (in the numerator) is also knovm as profit or net earnings. Sales revenue is the denominator however, revenue or sales could be used instead. 

Profit margin on sales = Net income available to common... 

Profit margin on sales indicates the profit (net income) per dollar of sales the company is earning. In other words, how much of every dollar is kept after everyone else has been paid. After paying all of the costs (COGS) and operating expenses (SG A), including interest expense, taxes, depreciation, and amortization, the amount that remains compared to what was sold is revenue. A profit margin of 10.1% tells PepsiCo that for every dollar it earns in sales, it keeps 10 cents after everyone else is paid. 

Basic earnings power (BEP) ratio is used for two reasons. One, it is used to measure the earnings power of a company s assets. In other words, it answers the question, how many dollars has the company earned from operations per dollar of asset employed Second, since taxes and debt financing have a direct effect on profit margin on sales, BEP is useful in distinguishing between companies with different tax and debt structures. PepsiCo brings in 12.5 cents in operating profit for every dollar it has in total assets. 

Profit margin on sales Net income available to common stockholders/ Sales revenue = ( 6,740- 8)/ 66,415 = 10.1%... 

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