# Operating Profit Margin

The operating profit margin represents what are often called the pure profits earned on each sales dollar. It is calculated as follows:

Operating profit margin = | Net operating income |

Sales |

For Jimco operating profit margin for 1993 is

$4,000,000 | = .0784, or 7.84% |

$51,000,000 |

industry average = 5.47%

## Net Profit Margin

The net profit margin measures the percentage of each sales dollar remaining after all expenses, including taxes, have been deducted. It is calculated as follows:

Net profit margin = | Net income after taxes |

Sales |

For Jimco's the net income margin for 1993 is:

$6,580,000 | = .129, or 12.9% |

$51,000,000 |

industry average = 16.13%