ECONOMICS

Detailed explanation-1: -The TNMM applies in a manner similar to RPM and CPM, and therefore must be applied in a manner consistent with the manner in which RPM or CPM is applied – the only difference is that TNMM examines net profit, while RMP and CPM examine gross profit.

Detailed explanation-2: -Pros: The TNMM’s relatively relaxed comparability requirements make it one of the most widely used transfer pricing methods. Net-profit data is often publicly available, and the TNMM is less sensitive to minor differences between comparable transactions.