Net profit margin is the ratio of net profit to total revenue.
Net profit is calculated by subtracting all costs from total revenue.
Net profit margin is a good metric to use when comparing your company's performance to that of other companies in your industry.
For example, if you're a software company and you have a net profit margin of 20%, you're doing better than the average software company.
If you're a software company and you have a net profit margin of 10%, you're doing worse than the average software company.
It can be difficult to calculate Net Profit Margin directly inside of Xero; that's where Causal comes in.
Causal is a modelling tool which lets you build models on top of your Xero data. You simply connect Causal to your Xero account, and then you can build formulae in Causal to calculate your Net Profit Margin.
Causal lets you build models effortlessly and share them with interactive, visual dashboards that everyone will understand.
In Causal, you build your models out of variables, which you can then link together in simple plain-English formulae to calculate metrics like Net Profit Margin. This makes your models easy to understand and quick to build, so you can spend minutes, not days, on your models.
When you're done, you can share the link to your model with stakeholders. They'll be able to view your model's outputs in a visual dashboard, rather than a jumble of tabs and complex formulae. The dashboards are interactive, letting viewers tweak your assumptions to see how they affect the model's outputs.
Causal lets you add visuals in a single click, letting you plot out graphs and distributions for metrics like Net Profit Margin.