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Question 1

Profitability

Answer 1

The ability of a business to earn profit as expressed in relative terms by comparing profit against a base like sales, assets or owners’ equity.

Question 2

Net Profit Margin (NPM)

Answer 2

• A profitability indicator that indicates expenses controlled by calculating the percentage of Net Sales revenue that is retained as net profit.
• It measures how much of each dollar of net sales revenue remains as Net Profit after expenses are deducted.
• It is a good indicator of overall expenses control

Question 3

Formular for NPM

Answer 3

Net Profit / Net sales X 100