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. Domestic tax rates tend to remain level unless there are changes in the rates established by the Federal, state or local governments. Foreign rates will vary depending on the countries a company does business in. Overseas rates can change as a company does more or less business in different countries. The Net Profit Margin shows net profits as a percent of sales.