Revenue and Net Profit Margin

The top and bottom of the income statement

We recently looked at fundamental data, like net income, for Apple. Net income is the bottom line of the income statement, so let’s look at the top - revenue (also referred to as sales):

Apple has seasonality to its revenue, so we want to consider the trailing twelve month total to smooth things out:

Their revenue looks very similar to their net income:

And, if they are close, we might expect the ratio of net income over revenue to be close:

That’s some amazing consistency. Apple has basically kept a consistent net profit margin of 20% for a while now. Is it any wonder the stock has done so well? Not only does Apple consistently grow revenue, their profit margin is incredible.

This will also be a great benchmark ratio as we look to apply this financial metric to other businesses. We all know there is only one Apple but perhaps we can find other really good stocks with great profit margins as well - plenty of metrics to explore in coming posts!

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