profit margin

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Related to Operating margin: profit margin, Operating income, Net operating 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 ?
Excluding the revenues and results of the acquisitions, TNT said operating margins were on par with last year's levels.
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.
In total for the year, growth amounted to 10% and the operating margin was 6.
iay the operating margin amounted to 17 (17) per cent
Moreover, Fitch believes that PHP, much like other managed care organizations around the country, will experience pressure on premium increases and that PHS will be challenged to continue to find ways to limit increases in administrative and medical costs in PHP to maintain operating margins at current levels.
An upgrade of the company's IDR will be predicated on improved and stable adjusted operating margins, continued reduction in non-accrual loans, and continued development of the company's loan syndication capabilities.
The Positive Outlook is supported by the strong performance and outlook at Cessna, the long-term growth potential at Bell due to positions on several large defense programs, strong operating performance at TFC, and the likelihood of higher operating margins across all segments in 2007.
Operating margins were up 26 basis points (bps) to 11.
This should result in sustained operating margins consistent with budgeted amounts for fiscal 2007.
Fiscal 2006 was MSHA's fourth consecutive year of operating profitability following large negative operating margins in fiscal years (FY) 1999 and 2000.