Is There An Ideal Net Profit Margin?


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Ellie Hoe answered
We cannot determine an ideal net profit margin figure in general. Net profit margin figure varies from industry to industry. For example a consumer good industry may have net profit margin of 15% as compared to the IT industry which can have net profit margin figure much higher than the other industries. As you haven't mentioned any particular industry, therefore you should always keep one thing in mind that whatever the industry is; higher net profit margin is always good. Net profit margin is a measure of profitability therefore companies always strive for achieving higher profit margin. The higher the profit margin, higher the company's profitability. However there is no ideal profit margin, owing to the fact, that companies usually compare their profit margins from the previous years or compare it from the other companies in the same industry to evaluate their profitability.

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