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A useful measure of a Company’s overall level of operating efficiency is Net Income Margin. Expressed as a percentage, Net Income is divided by Sales.

The Net Income Margin is calculated by the following formular:

NIM = Net Income / Sales

Expressed as a percent, NIM measures a Company’s overall level of operating efficiency, a comparison can be made over the previous Financial Years. For Inter Sectorial comparisons, the Net Income Margin has limited use because of the impact of Depreciation, Amortisation, Taxes and Capital Structure. A comparison of companies with headquarters in different countries, does not really make sense for the reasons stated above.


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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: or Telegram +393339034488

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