How is Total Profit Margin calculated?

Total Profit Margin is calculated using the formula for the margin ratio, which is designed to provide insights into a company's profitability relative to its total revenues. By dividing net income by total revenues, this metric reflects how much profit the organization retains from its total sales after accounting for all expenses.

This calculation is significant for understanding the efficiency of a company in converting revenues into profit. It allows stakeholders to assess the financial health of the organization and to compare profitability across different periods or with industry benchmarks. A higher total profit margin indicates that a company is effectively managing its costs and maximizing profit relative to its sales.

The other options do not accurately define Total Profit Margin. For instance, calculating net revenues minus total costs gives a different financial figure that does not express the relationship of profit to revenue in the way the Total Profit Margin does. Similarly, fixed costs divided by total income and total revenues divided by profit do not yield the desired margin calculation typically used in financial analysis.