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Definition of Profit margin
Indicator of profitability. The ratio of earnings available to stockholders to net sales.
the ratio of income to sales
The ratio of net income to net sales.
The ratio of net income before taxes to net sales.
Gross profit divided by sales, which is equal to each sales dollar left over after paying
Gross profit divided by revenue.
Net income divided by sales; the amount of each sales dollar left over after all expenses
The ratio of operating margin to net sales.
A measure of how much profit is earned on each dollar of sales. It
This first-line measure of profit
a contract in which the customer agrees
model a model that indicates the return on investment
Highlights the fact that return on assets (ROA) can be expressed in terms
Ratios that focus on the profitability of the firm. profit margins measure performance
A method of costing that is concerned with managing whole-of-life costs of a product/service during the product design phase – the difference between target price (to achieve market share) and the target profit margin.
The cumulative book income plus any gain or loss on disposition of the assets on termination of the SAT.
A transaction in which an investor borrows to buy additional shares, using the shares
cash flow from operating activities, or cash flow from profit
This equals the cash inflow from sales during the period minus the cash
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
Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
analysis a procedure that examines
Dollar safety margin
The dollar equivalent of the safety cushion for a portfolio in a contingent immunization
EBITDA divided by total sales or total revenue.
Effective margin (EM)
Used with SAT performance measures, the amount equaling the net earned spread, or
Revenues less the cost of goods sold.
The profit a company makes before expenses and taxes are taken away.
The difference between the price at which goods or services are sold and the cost of sales.
The result of subtracting cost of goods sold from sales. Synonymous with gross margin.
Revenue less cost of goods sold.
Initial margin requirement
When buying securities on margin, the proportion of the total market value of
Maintenance margin requirement
A sum, usually smaller than -but part of the original margin, which must
This allows investors to buy securities by borrowing money from a broker. The margin is the
The amount added to a lower figure to reach a higher figure, expressed as a percentage of the higher figure, e.g. the margin that profit represents as a percentage of selling price.
Margin account (Stocks)
A leverageable account in which stocks can be purchased for a combination of
A demand for additional funds because of adverse price movement. Maintenance margin
Margin of safety
A measure of the difference between the anticipated and breakeven levels of activity.
margin of safety
the excess of the budgeted or actual sales
Margin requirement (Options)
The amount of cash an uncovered (naked) option writer is required to
Margin Tax Rate
The tax rate applicable to the last unit of income.
The cost of producing one extra unit.
The incremental change in the unit cost of a product as a result of a
Marginal Propensity to Consume
Fraction of an increase in disposable income that is spent on consumption.
Marginal Propensity to Import
Fraction of an increase in disposable income that is spent on imports.
Marginal Propensity to Save
Fraction of an increase in disposable income that is saved.
Marginal tax rate
The tax rate that would have to be paid on any additional dollars of taxable income earned.
marginal tax rate
Additional taxes owed per dollar of additional income.
Marginal Tax Rate
Percent of an increase in income paid in tax.
Net operating margin
The ratio of net operating income to net sales.
See operating profit.
The profit made by the business for an accounting period, equal to gross profit less selling, finance, administration etc. expenses, but before deducting interest or taxation.
See earnings before interest and income tax (EBIT).
The margin needed to cover a specific new position. Related: margin, security deposit (initial)
a temporary absorption costing profit caused
product contribution margin
the difference between selling price and variable cost of goods sold
product line margin
see segment margin
What’s left over after you subtract the cost of goods sold and all your expenses from sales.
The difference between income and expenses.
The general term profit is not precisely defined; it may refer to net
Profit and Loss account
A financial statement measuring the profit or loss of a business – income less expenses – for an accounting period.
profit and loss statement (P&L statement)
This is an alternative moniker
Profit before interest and taxes (PBIT)
a responsibility center in which managers are responsible for generating revenues and planning and controlling all expenses
An entity within a corporation against which both revenues and costs are
A division or unit of an organization that is responsible for achieving profit targets.
This concept refers to a separate source of revenue and
Ratios based on sales revenue for a period. A measure of
an incentive payment to employees that is
Profit Sharing Plan
A retirement plan generally funded by a percentage of company
a visual representation of the amount
The present value of the future cash flows divided by the initial investment. Also called
See cash value added.
A method for determining the profitability of an investment. It is
Ratio of net present value to initial investment.
profitability index (Pl)
a ratio that compares the present value of net cash flows to the present value of the net investment
pseudo microprofit center
a center for which a surrogate
real microprofit center
a center whose output has a market value
The amount of profit after deducting interest, taxation and dividends that is retained by the business.
A probability used to determine a "sure" expected value (sometimes called a
the excess of revenues over direct variable expenses and avoidable fixed expenses for a particular segment
total contribution margin
see contribution margin
The profit per unit sold of a product after deducting product
An additional required deposit to bring an investor's equity account up to the initial margin
The annual sales volume level at which total contribution
The sales level at which a company, division, or product line makes a
degree of operating leverage
a factor that indicates how a percentage change in sales, from the existing or current
This is a key factor in the profit model of a business. Product
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