What ratio measures the percentage of each sales dollar remaining after deducting all costs and expenses?

The answer is net profit margin, which is a key financial metric that indicates the percentage of revenue that remains as profit after all costs, expenses, taxes, and interest have been deducted from total sales. This ratio provides a clear picture of a company's overall profitability and efficiency in managing its costs.

When analyzing a company's financial health, net profit margin is particularly important because it reflects the bottom line—what the company actually retains from each dollar of sales that contributes to its net income. A higher net profit margin suggests that the company is effective at converting revenue into actual profit, indicating strong financial performance.

Other ratios such as gross profit margin and operating margin focus on specific segments of revenue and expenses. Gross profit margin looks solely at revenue minus the cost of goods sold, not accounting for operating expenses or taxes. Operating margin measures profitability from operations alone and does not reflect the effects of interest and taxes. The profit margin ratio can typically refer more generally to any of these metrics or could be confused with net profit margin, but it is less specifically defined.

Thus, net profit margin best answers the question regarding the percentage of each sales dollar that becomes profit after all costs and expenses are considered.