profit-margins ratio

(redirected from profit-to-sales ratio)

profit-margins ratio

or

profit-to-sales ratio

a measure of a firm's PROFIT MARGINS, which expresses the firm's PROFITS as a percentage of its SALES REVENUE. Competitive pressure on selling prices or cost increases serve to squeeze profit margins and affect profits. The profit-margins ratio has a significant impact upon a firm's RETURN ON CAPITAL EMPLOYED.
References in periodicals archive ?
The company also had a strong net profit-to-sales ratio.
Hitachi surged 22 yen or 5.5 percent to 425 yen on optimism for its cost-cutting measures following a report the company plans to raise its operating profit-to-sales ratio to above 10 percent.
Annual profits fell by a staggering -69.0%, with profit-to-sales ratio falling to just 1.4%, the lowest in at least 8 years.
Mitsukoshi also hopes to cut its debt by 36 billion yen (US$258.8 million) to 100 billion yen, boost its operating profit-to-sales ratio to 2.5 per cent from the 0.56 per cent in fiscal 1997, and increase operating profits.
Manufacturing profits were expected to recover more strongly than non-manufacturing, with the current profit-to-sales ratio stabilising at around 2.8 for FY 1993 as a whole (compared with a peak of 5.8 in 1989).
Through the merger, Yamanouchi and Fujisawa aim to achieve a ''midterm goal'' of more than 1 trillion yen in annual pharmaceutical sales with an operating profit-to-sales ratio of around 25%.
Under the plan, the company aims for annual sales of 100 billion yen, an operating profit-to-sales ratio of more than 30% and an average annual growth rate of 15% in operating profit by the final year.
Simple cost-to-sales and profit-to-sales ratios can be misleading because implicit in such ratios is the assumption of a constant returns to scale production function.