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# How do you calculate net profit ratio?

 +1 vote! +7 you voted Answer by  lexuslady315 (635) Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage. [Net Profit Ratio = (Net profit / Net sales) × 100]

 +1 vote! +7 you voted Answer by  JasonHadley (245) While there are a variety of different net profit ratios, the general concept behind this type of ratio is comparing the net profit (after tax profit) to the revenue source (sales). As a result, all variations of this formula will revolve around after tax margin (net profit) divided by sales. A simple internet search will provide definitions of variations.

 +1 vote! +7 you voted Answer by  jconk (62) To calculate net profit ratio, you must first obtain net profit. This is done by simply subrtacting all expenses from gross revenue. Then divide net profit by gross revenue to arrive at your net profit ratio. Move decimal two places right to express as a percentage.

 +1 vote! +6 you voted Answer by  DrFeelGood (259) You'll need to take either your gross annual income (assuming you know it), or your weekly income and multiply it by 48. Deduct taxes, item cost, shipping cost and any other form of noteworthy expense from your product cost margin and you've effectively got what you would call your "net profit."

 +1 vote! +6 you voted Answer by  thekingoffling (58) The formula for finding net profit ratio is as follows: (Revenue -(Cost of Goods Sold + Operating Costs + Other Expenses + Interest + Tax and Non Tax Expenses - Tax and Non Tax Income) / Revenues} * 100. Another equation that may possibly be viewed as simpler is (net profit/turnover)*100.

 +1 vote! +6 you voted Answer by  noseclams (26) Net profit ratio is equal to: (net profit / net sales) * 100 The higher the net profit ratio, the higher the profitability of the firm. It is also known as net profit margin.

 +1 vote! +3 you voted Answer by  les59 (852) Calculate Net Profit Ratio by adding up all Accounts Receivables and subtract Accounts Payables. Take this number and subtract taxes. This is your net profit. Turn this into a percentage for ratio.