Calculate the net profit margin based on above

Solution

Net profit Margin = Net Profit/ Sales Sales = 150% of direct costs = 150% of 96 lakh = 1,44,00,000   Calculation of Net profit: Sales                                                               1,44,00,000 Less: Direct costs                                           -96,00,000 Less: operating costs                                      -16,00,000 EBIT                                                               32,00,000 Less: Interest on debt (8% on 80 lakh)           -6,40,000 Profit Before tax                                           25,60,000 Less: Tax (30%)                                              -7,68,000 Net Profit                                                       17,92,000   Net profit Margin = 1792000/14400000                             = 12.44%