What is the net profit rate of sales?
The net profit rate of sales refers to the comparative relationship between the net profit and sales revenue of an enterprise, which is used to measure the ability of an enterprise to obtain sales revenue in a certain period of time. How much operating profit can this index cost achieve?
The net profit rate of sales, also known as the net profit rate of sales, is the percentage of net profit to sales revenue.
This indicator reflects the amount of net profit brought by each yuan of sales revenue, indicating the income level of sales revenue.
It is directly proportional to net profit and inversely proportional to sales revenue. While increasing sales revenue, enterprises must obtain more net profit accordingly, so that the net profit rate of sales will remain unchanged or be improved.
In business, it can often be found that while expanding sales, due to the substantial increase in sales expenses, financial expenses and management expenses, the net profit of enterprises may not necessarily increase in proportion, or even appear negative growth. Blindly expanding the scale of production and marketing may not bring positive benefits to enterprises. Therefore, analysts should pay attention to the increase or decrease of net profit per 65,438+0 yuan sales revenue, so as to examine the benefits of sales revenue growth.
By analyzing the fluctuation of net profit rate of sales, enterprises can improve their management level and profitability while expanding sales.
classify
The net profit rate of sales can be decomposed into sales gross profit rate, sales tax rate, sales cost rate and expense rate during sales.
Calculation formula of net profit rate of sales
The calculation formula of net profit rate of sales is:
Net profit rate of sales = (net profit/sales revenue) × 100%
Among them, net profit (after-tax profit) = total profit-income tax expense = main business income+other business income-main business cost-other business cost-business tax and additional-period expenses (sales expenses+management expenses+financial expenses)-asset impairment loss+fair value change income (loss is negative)+investment income (loss is negative)-income tax expense.
Judging from Buffett's letters to shareholders in the past 40 years, Buffett is very concerned about the sales profit rate of subsidiaries. Sales profit rate, that is, profit divided by sales revenue. Buffett sometimes uses pre-tax profit and after-tax net profit to calculate the sales profit rate, but in most cases it uses after-tax profit. Therefore, the so-called sales profit rate generally refers to the net sales profit rate.
The sales profit rate of enterprises in different industries varies greatly. After Buffett acquired Berkshire Textile Factory on 1965, he found that the net profit rate of textile business was very low. However, after he bought the newspaper, he found that the sales profit rate of the newspaper industry was significantly higher: "Although the ratio of high news cost and low news cost to operating income of newspapers of the same size is about three percentage points different, the pre-tax sales profit rate of these newspapers is often more than ten times this difference."
Buffett's standard for measuring the net profit rate of enterprises is mainly to compare with the industry level, and properly consider the environmental factors in the region: "The profit of Buffalo news daily 1983 slightly exceeded the original target net profit rate 10%.
This is mainly due to two factors:
(1) Due to the offset of huge losses in the previous period, the state income tax expense is lower than the normal level;
(2) The cost per ton of news printing is greatly reduced (the situation of 1984 may be equally unexpected but completely opposite). Although the net profit rate of Buffalo Daily is only equivalent to the average level of the newspaper industry, if the local economy and sales environment where Buffalo Daily is located are considered, this performance is quite good. "
According to its driving factors, there are four ways to improve sales profit rate: increasing sales, raising prices, reducing operating costs and reducing operating expenses.
Buffett analyzed a chocolate in 1986, and found that its high net profit rate mainly depends on stable sales and cost control: "The sales of chocolate in 1986 increased by about 2%. Compared with previous years, the sales trend has improved. In the past six years, the number of pounds sold in a single store has been declining, and sales can only be increased or maintained by opening new stores. However, the sales of 1986 during Christmas were surprisingly strong, which led to no further decline in sales this year. Although the price has only increased slightly, Xi Shi can still maintain a very good sales profit rate by stabilizing single-store sales and trying to control costs. "
Buffett's analysis of 1990 shows that the increase in the net profit rate of Xi Shi's sales mainly depends on price increase and cost control: "The physical sales of Xi Shi Chocolate 1990 hit a record high, but the growth rate was low only because the previous sales of 1990 were really good. After Iraq invaded Kuwait, the number of consumers shopping in shopping malls in the western United States decreased significantly. During the Christmas period, the sales pounds of Xi Shi chocolate decreased slightly, but the operating income still increased because the price increased by 5%. The increase in sales revenue, coupled with the good control of expenses, has improved the sales profit rate. "
Buffett pointed out that the main operating cost items have a great influence on the sales profit rate: "Buffalo news daily's profit at 1983 slightly exceeds the initial target sales net profit rate 10%. This is mainly due to two factors: the national income tax expenses are lower than the normal level, because the huge losses in the previous period are offset; The cost per ton of news printing has been greatly reduced. " On the contrary, Buffett predicted in 1987: "In Buffalo Daily of 1988, the sales profit rate and profit will decrease. The soaring cost of newsprint will be the main reason. "
Buffett 1996 pointed out that when the sales revenue growth is not good, the key to improve the sales profit rate is to control the expenses: "The only thing that disappoints us in 1996 is the jewelry business. Boxian Jewelry did well, but the profit of Gertz Berg Jewelry fell sharply. In recent years, while the sales revenue of a single store has increased substantially, the expenses have also increased accordingly, and the profits have also continued to increase in the near future. However, when the sales revenue no longer increases, the sales profit rate naturally decreases. JeffComment, president of Helzberg Jewelry Company, has taken decisive measures to deal with the rising costs. I think the profit of 1997 will be improved. "
Whether the measures to improve the net profit rate of sales can be successful has a great relationship with the management. Buffett 1989 said: "The publisher of Buffalo Daily, StanLipsey Lipsey, has completely reached the maximum product capacity of our newspaper. Compared with an ordinary manager in the same business environment, I believe that StanLipsey's management ability has at least increased the sales profit rate of our newspaper by more than five percentage points. This is a very surprising achievement, which can only be created by talented managers who are very familiar with and very concerned about all aspects of the enterprise. "
Buffett (1987) pointed out that the quality of the company's products and services will never be reduced just to improve the sales profit rate. "Munger and I don't believe in the so-called flexible operating budget at all. Do we really reduce the news pages of Buffalo Daily or the quality of Hershey's chocolate products and services just because of the decline in profits? Or on the contrary, just because the profits keep growing, it is not good for the company to hire an economist and a corporate strategist to fight an institutional advertising war. These practices are meaningless to us. "