A bakery earned a net profit of $32,175 on net sales of $270,500. What is its net profit margin?

1. The net profit margin divides net profit by net sales. 2. Net profit is $32,175. 3. Net sales are $270,500. 4. Divide: $32,175 divided by $270,500 equals 0.119. 5. Expressed as a percentage that is 11.9 percent. 6. In plain terms the bakery is earning 11.9 cents on each dollar of sales. 7. Answering 40.9 percent divides by owners' equity instead of sales, which is the return on equity rather than the margin. 8. Good margins vary widely by trade: a grocery store may sit below 1 percent while a jewelry store exceeds 10 percent. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.7 Analyzing Financial Statements_