what should net income be as a percentage of gross sales?

Answer 1

There is no exact percentage. It depends on the industry more than anything else. Supermarkets for example have a very low net to sales. Drug companies on the other hand have a very high net to sales. Most everyone else is somewhere in between.
Then there are the banks that actually do not have sales, but they do have net.

Here are a few industry trends.

Drug companies 20%
Discount stores 2%
Software 25%
manufacturing 5%
services 6%

Answer 2

This depends on the type of business.

One major variable is the sales volume, and the number of inventory turns the firm has annually.

Example: retail grocers have a net income that's perhaps 1% of gross sales. They may average 25-30 inventory turns a year, meaning the merchandise in the store doesn't stay long.

However, a retail jeweler may have a 20-25% net income, but it's not uncommon for this type business to have merchandise that doesn't sell for a year or longer.

Answer 3

You are talking about profit margin on sales. In different countries it is different. In the late 80's when I was in US it was around 0.5%. I don't know what it is there right now. In India it can be as high as 6 to 11%. One is a developed nation with a rational economy and the other a developing nation with non transparent activities.

Answer 4

depends on what business you are talking about...