Effective margin

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Effective margin (EM)

Used with SAT performance measures, the amount equal to the net earned spread, or margin of income, on assets in excess of financing costs for a given interest rate and prepayment rate scenario.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Effective Margin

The profit margin produced from an asset if one assumes financing at a certain interest rate. That is, one calculates potential profits as if income remains constant but cost of funds varies. See also: Effective yield.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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Gross profit was up by three percent on account of better volumes in polyester business and effective margin management.
Net income increased nearly 120% year-over-year, fuelled by our extensive terminal network, effective margin management, a favourable forward-product pricing environment and our continuing initiatives to help mitigate the effects of commodity price volatility in our business.'
Across Europe the priority for coatings producers and their chemical suppliers is effective margin management so that the problems of decreasing sales and the necessity to make up for earlier rises in raw material costs do not cause drastic falls in profitability.

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