The next line in the report is Operating Margin, which shows the percentage of sales left after the cost of goods sold or services provided and also after selling, marketing, and general and administrative expenses. It is calculated before subtracting depreciation and amortization, interest, and taxes. The trend of the margin over time is important. A steady or rising trend is generally positive. Declining margins are often a cause for concern.
Depreciation is shown on the next line.
This is an amount charged against operating profits to reflect the aging of plant and equipment. A building, but not the land under it, is often written off in equal instalments over a 30 or 40-year period. Computers, on the other hand, are likely to be written off over three to five years. Net profit is the total earnings of a company after all costs, including taxes. Most companies' tax rates stay relatively steady over time.