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Gross margin |
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Gross marginThe difference between the selling price of an item and the purchase or manufacturing cost, expressed as a percentage of the selling price.For example, if it costs a company £6 to manufacture an item and the selling price is £10, the gross margin is:(£10 - £6) / £10 x 100 = 40%When looking at a company's Report and Accounts, the gross margin of the business as a whole is its turnover less the cost of sales, divided by the turnover, multiplied by 100.For example: (£2,000,000 - £1,200,000) / £2,000,000 x 100 = 40%Similar MatchesUndermargined accountUndermargined accountA margin account that no longer meets minimum maintenance requirements, requiring a margin call on the investor. Margin securitiesMargin securitiesSecurities which may be bought or sold on margin. In the USA, an approved list of margin securities is published by the Federal Reserve Board. Margin of safetyMargin of safetyThe term given by Benjamin Graham, 'the father of value investing', to the idea that if you buy shares for less than two thirds of their net asset value, you automatically have a cushion against any deterioration in the company's trading position in the future. Put another way, 'buy cheap'.Graham's view was that it is extremely difficult to accurately predict a company's future earnings. For an investment to be 'safe', therefore, he liked to see a margin between the value of its net current assets and its share price. If the share price was below the net current assets divided by the number of shares in issue, he would consider buying it.One of the problems with Graham's approach is that in bull markets it is very difficult to find companies that fulfil his criteria. A second problem is that many of the fastest growing companies in modern economies are those whose assets are intangible - for instance, the value of their intellectual property. Under the Graham rubric, these sorts of assets would be excluded. Margin account (stocks)Margin account (stocks)A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock; if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers. Buy on marginBuy on marginBorrowing to buy additional shares, using the shares themselves as collateral. Further SuggestionsMargin requirement (options)marginal tax rate Marginal efficiency of capital Marginal cost Initial margin requirement Margin security Margin Profit margin Marginal propensity to import Maintenance margin Marginal value product Marginal revenue product profit margin Marginal propensity to save Marginal tax rate Marginal rate of transformation Margin requirement OTC margin stock Net profit margin Initial margin Profit margin Value marginal product Original margin variation margin Dumping margin |
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