Net profit margin is a financial metric that shows how much profit a company makes for every dollar of revenue it generates. It is calculated by dividing net profit by total revenue and is expressed as a percentage. A higher net profit margin indicates that a company is more efficient at converting sales into actual profit. This metric is important for assessing a company's profitability and financial health. Investors and analysts often use the net profit margin to compare companies within the same industry. A consistent or improving net profit margin can signal effective management and strong business performance.