What is defined as an organization's after-tax profit divided by its expenses?

The correct answer is Net Profit Margin, which measures an organization's profitability by indicating how much of each dollar of revenues is left as profit after all expenses, including taxes, have been deducted. Specifically, it is calculated by taking the organization's after-tax profit and dividing it by its total expenses. This metric gives insight into the overall efficiency of the company in controlling its costs relative to its revenues.

Net Profit Margin is crucial for assessing a company's financial health, as it captures the true profitability of the organization after accounting for the impact of taxes. It reflects how effectively management is able to convert revenues into actual profit and is a widely used indicator of financial performance in comparison to peers or over time within the same company.

In contrast, Gross Profit Margin focuses solely on the profit remaining after deducting the cost of goods sold, not including other operating expenses or taxes. Return on Equity assesses the profitability relative to shareholders' equity but does not relate directly to total expenses. Operating Margin analyzes earnings before interest and taxes as a percentage of sales but also does not factor in after-tax profit or all incurred expenses. Each of these other metrics provides valuable insights into different aspects of a company's financial performance but does not encompass the same criteria as Net Profit Margin.