Finding the Net Profit Margin for a Company

Finding the Net Profit Margin for a company is just 8 simple steps away!

1.) Go to the MSN Money Site: http://ca.moneycentral.msn.com/investor/common/find.aspx
2.) In the “Enter name:” field, type in your ticker symbol
3.) Select “Type of Symbol” radio button “Stock”
4.) Select Country from the drop down arrow (Canada)
5.) In the left hand tool bar, under the Financial Results header, click “Highlights”
6.) In the “Name or Symbol” field, enter your ticker symbol (i.e. BMO)
7.) Click on “Go”8.)Financial Highlights are listed. Net profit margin is the 3rd row.

Repeat steps for each of the five companies you are comparing.

Company
Net Profit Margin (last 12 months)
Royal Bank of Canada (RY)
13.60%
Toronto-Dominion Bank (TD)
16.39%
Bank of Nova Scotia (BNS)
25.32%
Bank of Montreal (BMO)
16.84%
Canadian Imperial Bank of Commerce (CM)
12.04%

So – if I based my investment decision on Net Proft Margin only, Bank of Nova Scotia would be my number one choice followed by the Bank of Montreal.

However, net profit margin (obviously) isn't the only number I make my investment decision on, but it's a good starting point, and a good way to confirm that indeed, the business I want to buy is actually making money.

For more information about Net Profit Margins, and how they are calculated, go to: http://beginnersinvest.about.com/od/incomestatementanalysis/a/net-profit-margin.htm

Net Profit Margin

To date, I've taken the following steps:
1.)Chose an industry
2.)Identified the 5 largest companies in that industry
3.)Identified the ticker symbol for each of those 5 companies

The next step, regardless of industry, regardless of business size, and regardless of how a business makes money, is to find out if they're making money. One indicator if a company is making money is their net profit margin.

Net profit margin is the percentage of a business' revenues that are actually profits. For example, when I buy a new shirt for $20, that $20 is broadly broken down into the following:

Fabric and labour $10
Shipping $1
Marketing $2
Business Price of shirt(Fabric and labour plus shipping plus marketing) = $13

Net Profit Margin = (Business Price of Shirt – Cost)/Cost
= ($20-$13)/$13
= 54%

For every $13 that the business spends on shirts, they make $7.

Three things to know about net profit margins:
1.)A positive net profit margin means the business is making money.
2.)A negative profit margin means the business is losing money.
3.)The higher the profit margin, the more money the business is making.

Next blog will give step by step instructions for how to find the net profit margin of a company.