It shows the percentage of sales revenue that ends up as profit after all expenses are paid. This includes every cost, from making the product to the company\u2019s rent and advertising. It’s a critical number because it tells you if the company’s actually making money or if it’s losing money. Net profit margin is a key part of bookkeeping and helps everyone from the manager to investors understand how well the company is doing.<\/p>\n
This is not as straightforward as it sounds, because it\u2019s not always clear which costs fall into each category. Analyzing the contribution margin helps managers make several types of decisions, from whether to add or subtract a product line to how to price a product or service to how to structure sales commissions. Before making any major business decision, you should look at other profit measures as well.<\/p>\n
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This distinction is important to both management and external users because fixed-costs are constant and variable-costs can change with the overall production levels. This format helps external users see how much of the revenues are dedicated to variable-costs and the amount of fixed-costs that the company is committed to. In fact, Coca Cola\u2019s assembly line only requires […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[],"class_list":["post-3974","post","type-post","status-publish","format-standard","hentry","category-bookkeeping","has-post-title","has-post-date","has-post-category","has-post-tag","has-post-comment","has-post-author",""],"builder_content":"","_links":{"self":[{"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/posts\/3974","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/comments?post=3974"}],"version-history":[{"count":1,"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/posts\/3974\/revisions"}],"predecessor-version":[{"id":3975,"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/posts\/3974\/revisions\/3975"}],"wp:attachment":[{"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/media?parent=3974"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/categories?post=3974"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.worldrealestatenetwork.com\/wordpress\/wp-json\/wp\/v2\/tags?post=3974"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}