profit margin

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Related to Operating Margins: Net profit margin, Operating income

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 ?
"We are committed to delivering sustainable mid to high single digit revenue growth and mid 20s adjusted operating margins over time, and are pleased to report good progress in H1 despite sales, as expected, reducing year-on-year," Hostetler added.
Its 2018 medians show that operating margins have declined across the board for the entire rating spectrum of hospitals.
ACG's operating margin was 22.7 percent for the quarter.
NSN's operating margin last year rose to 9.7 per cent from 5.7 per cent in 2012.
Technip said it expected a subsea operating margin of at least 12 per cent in 2014, down from around 14 per cent in 2013, before picking up in 2015.
! Washington, Safar 15, 1435, Dec 18, 2013, SPA -- Ford Motor Company said Wednesday it expects lower profit in 2014 and that its target for global operating margin is at risk, due to economic conditions in Europe and South America.
In addition, the report revealed "emerging" hedge funds - those with assets of less than $1bn - struggle to cover expenses based solely on management fee collections and do not realise comfortable (http://www.ibtimes.co.uk/search/result.htm?oe=UTF-8&cx=009600113782670949425%3Ahccycyvwf4i&cof=FORID%3A9&ie=UTF-8&q=operating+margins) operating margins .
"At this stage, a rating upgrade is unlikely," Moody's said, adding that a stabilisation of the outlook would require Nokia to regain a market share above 33% across the product range and operating margins growing towards 10% without a weakening of cash flows or the capital structure.
TNT revised its outlook for the full year, saying it now expects an operating margin of 17.5 per cent at the mail division, while reiterating its target for a full-year operating margin of nine to ten per cent at its express division.
By focusing on operating margins, we are seeking to take advantage of any increase in demand in the future."
Dillard's posted a $9.7 million operating loss for the third quarter while Federated's operating margin jumped to 5.4 percent in the third quarter from 3.63 percent in the same period last year.
Clary said nursing homes typically can tolerate low operating margins because many are guaranteed patients due to various state regulations that limit the supply of nursing home beds.