Question

In: Finance

Net profit margins among public companies Can you find the net profit margin of a public...

Net profit margins among public companies

Can you find the net profit margin of a public company as well as the industry average? Indicate whether the company's margin is strong or weak compared to the industry average. If you can also find an explanation of why the company has a better- or worse-than-average margin, that would be great, too.

Expert Solution

The net profit margin, also known as net margin, indicates how much net income a company makes with total sales achieved. A higher net profit margin means that a company is more efficient at converting sales into actual profit.

Net Profit/Total Revenue = Net Profit Margin

Apple Inc's Net Income for the three months ended in Dec. 2017 was $20,065 Mil. Apple Inc's Revenue for the three months ended in Dec. 2017 was $88,293 Mil. Therefore, Apple Inc's net margin for the quarter that ended in Dec. 2017 was 22.73%.

Apple Inc's Net Margin for the fiscal year that ended in Sep. 2017 is calculated as

Net Margin

=

Net Income/Revenue

=

48351/229234

=21.09 %

As you can see, the industry average Net profit ratio for FY 2017 is around 13-14%, whereas apple had a whooping 21.09%

The Reason behind this higher Revenues. Revenue figures for Apple inc are consistently high. The profit margin is also very attractive

Because of the brand value.

Following is the P/L Statement for Apple INC for 2017. As you can see, the revenues and financials are pretty

Sustainable.The revenues are good,compared to other players in the industry. And being one of the biggest

Employer and technology company of USA, Apple cannot actually manipulate its net income.

It definitely has a better NP Margin than the average.

jeff jeffy answered 2 years ago

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