why do investors tend to keep a close eye on the net margin of a firm?

Question

annual report

Answer 1

That's where the profit is. Gross means nothing. It's all about the net.

Answer 2

If a firms net margin is increasing then the firm is become more profitable with each unit sold.
If the net margin is decreasing then the firm is becoming less profitable with each unit sold.
If the net margin becomes negative then the firm is losing money with each unit sold as it is costing more to produce the unit and the revenue generated from the sale.
Therefore as an investor you would be quite interested in what the net margin is and what direction that figure is moving.

Answer 3

Internally, corporate management is interested in operating margin because they control the daily operations. But investors aren't interested in daily operations, but rather operations over time. So investors don't focus as much on operating margin as they do on net margin, which is the "bottom-line."

Why is it important to watch? Because it's a measure of how "profitable" a company really is, and gives a sense of whether the company is doing a good job keeping costs from skyrocketing out of control.