|Profit Margin Ratio|
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Definition of Profit Margin Ratio
Profit Margin Ratio
A measure of how much profit is earned on each dollar of sales. It
Capital rationing that under certain circumstances can be violated or even viewed
Clause causing repayment of a debt, if specified events occur or are not met.
Belief that an effort to keep unemployment below its natural rate results in an accelerating inflation.
A ratio computed by dividing annual
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid
A ratio that shows how well a company could pay its current debts using only its most liquid or “quick” assets. It’s a more pessimistic—but also realistic—measure of safety than the current ratio, because it ignores sluggish, hard-toliquidate current assets like inventory and notes receivable. Here’s the formula:
See quick ratio
The sum of cash, accounts receivable, and short-term marketable
Cash flow provided by operating
The ratio of net income to net sales.
The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard
Legal document establishing a corporation and its structure and purpose.
ratios that measure how effectively the firm is managing its assets.
The ratio of total assets to stockholder equity.
A broad-gauge ratio computed by dividing annual
Basic Earnings Power Ratio
Percentage of earnings relative to total assets; indication of how
Before-tax profit margin
The ratio of net income before taxes to net sales.
Benefit Ratio Method
The proportion of unemployment benefits paid to a company’s
Benefit Wage Ratio Method
The proportion of total taxable wages for laid off
The cumulative book income plus any gain or loss on disposition of the assets on termination of the SAT.
Buy on margin
A transaction in which an investor borrows to buy additional shares, using the shares
Canadian Deposit Insurance Corporation
Better known as CDIC, this is an organization which insures qualifying deposits and GICs at savings institutions, mainly banks and trust companys, which belong to the CDIC for amounts up to $60,000 and for terms of up to five years. Many types of deposits are not insured, such as mortgage-backed deposits, annuities of duration of more than five years, and mutual funds.
Placing one or more limits on the amount of new investment undertaken by a firm, either
a condition that exists when there is an
Limit set on the amount of funds available for investment.
Also called financial leverage ratios, these ratios compare debt to total capitalization
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
cash flow from operating activities, or cash flow from profit
This equals the cash inflow from sales during the period minus the cash
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash Flow–to–Income Ratio (CFI)
Adjusted cash flow provided by continuing operations
CASH FLOWS FROM OPERATIONS
A section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business.
The proportion of a firm's assets held as cash.
ratio of cash and cash equivalents to liabilities; in the case of a bank, the ratio of cash to total deposit liabilities.
Common stock ratios
ratios that are designed to measure the relative claims of stockholders to earnings
A single centralized account into which funds collected at regional locations
System whereby customers make payments to a regional collection center which transfers funds to
Movement of cash from different lockbox locations into a single concentration
A review of all engineering documentation used as the basis
Verifying that a delivered product matches authorizing
The difference between variable revenue and variable cost.
An intermediate measure of profit equal to sales revenue
the difference between selling price and
The margin that results when variable production costs are subtracted
contribution margin ratio
the proportion of each revenue dollar remaining after variable costs have been covered;
The profit made by a division after deducting only those expenses that can be controlled by the
Controlled foreign corporation (CFC)
A foreign corporation whose voting stock is more than 50% owned
The number of shares of common stock that the security holder will receive from
A legal "person" that is separate and distinct from its owners. A corporation is allowed to own
A legal entity, organized under state laws, whose investors purchase
Business owned by stockholders who are not personally
The net present value of an investment divided by the investment's initial cost. Also called
Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
analysis a procedure that examines
ratios used to test the adequacy of cash flows generated through earnings for purposes of
Restriction of loans by lenders so that not all borrowers willing to pay the current interest rate are able to obtain loans.
Indicator of short-term debt paying ability. Determined by dividing current assets by current
A ratio that shows how many times a company could pay its current debts if it used its current assets to pay them. The formula:
Calculated to assess the short-term solvency, or debt-paying
A measure of the ability of a company to use its current assets to
Current assets divided by current liabilities. This ratio indicates the extent to which the claims of short-term creditors are covered by assets expected to be converted to cash in the near future.
Customary payout ratios
A range of payout ratios that is typical based on an analysis of comparable firms.
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A comparison of debt to equity in a company's capital structure.
Total debt divided by total assets.
The percentage of debt that is used in the total capitalization of a
Debt-service coverage ratio
Earnings before interest and income taxes plus one-third rental charges, divided
A widely used financial statement ratio to assess the
The date on which a firm's directors meet and announce the date and amount of the next
The date on which the board of directors has declared a dividend.
A business segment that has been or is planned to be closed or sold off.
Net income and the gain or loss on disposal of a business segment whose assets and operations are clearly distinguishable from the other assets and operations of an entity.
Dividend payout ratio
Percentage of earnings paid out as dividends.
dividend payout ratio
Computed by dividing cash dividends for the year
dividend payout ratio
Percentage of earnings paid out as dividends.
dividend yield ratio
Cash dividends paid by a business over the most
The product of modified duration and the initial price.
Dollar safety margin
The dollar equivalent of the safety cushion for a portfolio in a contingent immunization
Domestic International Sales Corporation (DISC)
A U.S. corporation that receives a tax incentive for
A common gauge of the price sensitivity of an asset or portfolio to a change in interest rates.
The weighted average of the time until maturity of each of the
The expected life of a fixed-income security considering its coupon
The time it takes for a policy or annuity to reach maturity.
Earnings retention ratio
EBITDA divided by total sales or total revenue.
the creation of multi-country markets
Specialized banking institutions, authorized and chartered by the Federal Reserve Board
The duration calculated using the approximate duration formula for a bond with an
Effective margin (EM)
Used with SAT performance measures, the amount equaling the net earned spread, or
The percentage of the assets that were spent to run a mutual fund (as of the last annual
The time when the option contract ceases to exist (expires).
An expiration cycle relates to the dates on which options on a particular security expire. A
The last day (in the case of American-style) or the only day (in the case of European-style)
Feasible target payout ratios
Payout ratios that are consistent with the availability of excess funds to make
Federal Deposit Insurance Corporation (FDIC)
A federal institution that insures bank deposits.
Financial leverage ratios
Related: capitalization ratios.
The result of dividing one financial statement item by another. ratios help analysts interpret
Fisher's separation theorem
The firm's choice of investments is separate from its owner's attitudes towards
Fixed asset turnover ratio
The ratio of sales to fixed assets.
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