profit margin

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Related to Net Operating Margins: Operating profit margin

Profit margin

Indicator of profitability. The ratio of earnings available to stockholders to net sales. Determined by dividing net income by revenue for the same 12-month period. Result is shown as a percentage. Also known as net profit margin.

Profit Margin

A measure of how well a company controls its costs. It is calculated by dividing a company's profit by its revenues and expressing the result as a percentage. The higher the profit margin is, the better the company is thought to control costs. Investors use the profit margin to compare companies in the same industry and well as between industries to determine which are the most profitable.

profit margin

1. The relationship of gross profits to net sales in a business. Net sales are determined by subtracting returns and allowances from gross sales, whereupon the cost of goods sold is then subtracted from net sales to obtain gross profit. Gross profit is divided by net sales to obtain the profit margin—an excellent indicator of a firm's operating efficiency, its pricing policies, and its ability to remain competitive. See also gross profit margin.
2. Net profit margin of a business, which is calculated by deducting operating expenses and cost of goods sold and dividing the result by net sales. This term is less often used to indicate net profit margin.

Profit margin.

A company's profit margin is derived by dividing its net earnings, after taxes, by its gross earnings minus certain expenses. Profit margin is a way of measuring how well a company is doing, regardless of size.

For example, a $50 million company with net earnings of $10 million and a $5 billion company with net earnings of $1 billion both have profit margins of 20%.

Profit margins can vary greatly from one industry to another, so it can be difficult to make valid comparisons among companies unless they are in the same sector of the economy.

profit margin

the difference between the SELLING PRICE of a product and its PRODUCTION COST and SELLING COST. The size of the profit margin will depend upon the percentage profit mark-up which a firm adds to costs in determining its selling price. The size of the profit margin is measured by the PROFIT-MARGINS RATIO.

profit margin

the difference between the SELLING PRICE of a product and its PRODUCTION COST and SELLING COST. The size of the profit margin will depend upon the percentage profit mark-up that a firm adds to costs in determining its selling price, which in turn may be varied in response to changes in demand conditions and competition. See FULL-COST PRICING.

profit margin

The difference between the cost of a unit (house,subdivision parcel,condominium) including a pro rata share of all overhead and other such expenses, as compared to the sales price for that unit.

References in periodicals archive ?
For fiscal year 2004, western Pennsylvania hospitals showed a positive average net operating margin gain of 1.
Also, in an important sense, net operating margin represents the long-run performance of the firm since selling servicing is selling the largest single source of revenue.
Lower gross margins with higher operating expenses caused net operating margins to rail 19.
On the other hand, cotton, farm supply, rice and sugar cooperatives all had lower net operating margins.
Most of the other commodity groups had mixed results, with the majority having higher net operating margins.
AND SUBSIDIARIES (000s, except per share data) Three Months Ended September 30, September 30, 2005 2004 Income Statement Data Revenues $10,400 $8,392 Direct operating costs and expenses (3,836) (4,086) Net operating margins 6,564 4,306 Operating income 3,635 1,985 Net earnings 3,126 1,985 Net earnings allocable to limited partners 3,063 -- Net earnings per limited partners' unit--basic $0.
The Company has previously indicated that its strategic plan calls for a doubling of net operating margins particularly in its coatings businesses, and a doubling in size of its consumer business.
The booking out of a bulk transaction has no effect on our net operating margins or net earnings.
Bennett, President and Chief Executive Officer, stated that, "As we have indicated, we are determined to increase both our gross and net operating margins in the Coatings Group.
AND SUBSIDIARIES FOR THE THREE MONTHS AND YEAR ENDED JUNE 30, 2005 AND 2004 (000s, except per share data) Three Months Ended Years Ended June 30, June 30, June 30, June 30, 2005 2004 2005 2004 Income Statement Data Revenues $9,687 $8,808 $36,093 $34,437 Direct operating costs and expenses (3,710) (3,923) (15,842) (14,813) Net operating margins 5,977 4,885 20,251 19,624 Operating income 3,514 2,424 10,885 10,109 Net earnings 3,332 2,424 10,703 10,115 Net earnings allocable to limited partners 954 -- 954 -- Net earnings per limited partners' unit -- basic $0.