profit margin

Also found in: Dictionary, Thesaurus, Wikipedia.
Related to profit margin: Net profit margin, 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 ?
3 billion, and Operating profit margin from business operations) will be approximately 9.
As for the fourth quarter and due to soaring sales of Apple products, Cheng Uei is expected to witness growth in revenues, profits, and gross profit margin.
The higher the gross profit MARGIN, the larger the stream.
PUB investment groups known as pubcos have come under attack from a union claiming they have far greater profit margins than leading supermarkets.
60 percent net profit margin average is, it should be noted that an average is created by accumulating a range of figures.
Rising costs hit profit margins in a huge way, and if your project didn't start out with a big enough profit margin before the "surprise factor" of unforeseen cost increases, then you don't have enough profit in the deal to make any money.
This results in your profit margin (100- 60-15+100=0.
Although G-P is formulating a tissue strategy focusing on paring down debt and improving profit margins, the company realizes that its strong tissue and towel business must not suffer any reversals.
Graham Chairman, CEO 399,996 Estimated dividend Bonus Other 1 income OPERATING PROFIT MARGIN.
The West Midlands was in 26th position, while Worcestershire was right behind it at 27th with profit margins of 4.
The average was slightly lower for large-volume builders in both 1996 and 1997, and builders in the Northeast enjoyed better-than-average profit margins in both years.