profit margin

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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 ?
Says Budhbhatti: "Consumer goods and construction sectors are likely to benefit from lower raw material costs and steady sales realisations resulting in better operating profit margins.
Assume that at a 20% drop in sales to $1,120,000, the operating profit margin in the model falls from 20% to 15%.
They reported operating income increases averaging 17%, over $35 million each, plus average operating profit margins rising to 21.
Its post-restructuring operating profit margin, for which it has set a target in the mid-teens, rose to 11 per cent in the six months to June 30, up from 6.
In these examples, the proceeds from fund-raising or the sponsor's endowment funds have not yet been tapped, assuming the not-for-profit also enjoys positive operating profit margins and cash flow.
Compared to the operating profit margins of the companies in the Separations Index, which have been consistently over 13% of sales every quarter, operating profit margins for the companies in the Spectroscopy Index haven't seen double-digit margins since prior to the first quarter of 1999.
Reaching stabilized occupancy is a recognized challenge, yet it may not solve your sagging operating profit margins.
Certain statements in this press release, including statements regarding our expectations regarding continued manufacturing efficiencies, increases in our gross and operating profit margins, our ability to manage operating expenses, and our ability to implement additional price increases are forward-looking statements, which are made pursuant to the safe-harbor provisions of the Securities Litigation Reform Act of 1995.
Column Graph: Quarterly Operating Profit Margins ROS 1997 1998 1999 Q1 13.
Operating profit margins have been under pressure from high PVC prices, although Amanco has been able to translate the majority of the cost increase to consumer prices in most of the markets it operates.
Column Graph: Separation Index Operating Profit Margins
TMK's rating strengths include its high-quality investment portfolio, very strong GAAP earnings coverage ratios, and strong pretax operating profit margins and consolidated risk-based capitalization (RBC) of 314% at Dec.