Inventory
Inventory is another factor that contributes to changes in a company's net profit margin. Although a company records inventory as an asset on the balance sheet, the company does not report the cost of a sale until the company has actually made the sale. It is possible for a company to calculate the cost of goods in an inventory. However, an economic slowdown can greatly decrease the value of a company's inventory. This devaluation of inventory will affect the company's net profit margins. On the other hand, moving inventory and increasing the company's sales can have a positive impact on net profit margin.