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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

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.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

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.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
"Lenders appear less pessimistic regarding mortgage demand expectations; thus their profit margin outlook over the next three months is also slightly improved," saidDoug Duncan, senior vice president and chief economist at Fannie Mae.
The FTA experts said goods that has previously been subject to tax is eligible for the profit margin scheme.
KARACHI -- The average profit margin of banks has improved with lending yield on outstanding loans surging to an 18-month high of 8.08% in July, a development that comes after rates were adjusted in line with the benchmark interest rate.
Soleil said that if the decline in net profit margins is impacted by each company increasing its expenditure for expansion, it will prove beneficial in the long run.
The plan aims to lead to a doubling of the automaker's annual sales to 1.2m, and to increase its profit margins to about 9 percent, to put it on a par with other premium manufacturers.
'The decrease in gross profit margins reflects among others, the continuing impact of the weaker peso as well as efforts to reduce inventory levels during the period,' SSI Group said.
Our research uncovered evidence indicating that management teams at many public companies use overhead rates to manipulate interim quarters' gross profit margins. Companies that report actual first-quarter EPS lower than forecasted EPS for the first quarter often bias the next three quarters' gross profit margins upward, resulting in actual EPS being closer to forecasted EPS and, at times, greater than forecasted EPS.
According to ministry officials profit margins of marketing companies and dealers had been increased in December last year and the government was of the opinion that due to reduction in prices of petroleum products, profit margins of oil marketing companies and dealers would also be decline proportionately.
Survey results also found that "approximately one in two of these lenders cite 'government regulatory compliance' as a key driver" for the anticipated ongoing decline in profit margins, Fannie Mae reported.
The ministerial decision stipulates reducing profit margins on drugs in the private sector, making these between 35 to 43 per cent, instead of 55 per cent.
CONSTRUCTION CONFIDENCE INDEX Semiannual ABC survey 2012 1st Half 2012 2nd Half 2013 1st Half (Q4 2011-Q1 (Q2-Q3 (Q4 2012-Q1 2012) 2012) 2013) Sales 66.3 62.3 63.0 Profit Margins 56.3 55.9 55.3 Staffing Levels 62.2 59.6 60.0 2013 2 nd Half 2014 1st Half (Q2-Q3 (Q4 2013-Q1 2013) 2014) Sales 63.3 68.2 Profit Margins 57.5 60.3 Staffing Levels 62.2 65.0
Under the current legislation, a bank may unilaterally change at any time its profit margin set at the signing of the contract without the consent of the borrower.