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Gross profit margin |
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Gross profit marginGross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold.Gross profit margin Similar MatchesProfit RangeProfit RangeThe range within which a particular position makes a profit. Generally used in refernce to strategies that have two break-even points - an upside break-even and a downside break-even. The price range between the two break-even points would be the profit range. Realized profit (or loss)Realized profit (or loss)A capital gain or loss on securities held in a portfolio that has become actual by the sale or other type of surrender of one or many securities. Pretax earnings or profitsPretax earnings or profitsNet income before federal income taxes are subtracted. Profit and loss statement (P&L)Profit and loss statement (P&L)A set of accounts, usually prepared annually, which depict a company's trading performance and are normally read in conjunction with the balance sheet and cash flow data. The profit and loss account can broadly be shown as follows:Turnover (sales) less manufacturing costs (or cost of sales if for example a retailing company) = gross profit or lossGross profit plus any non-trading income less operating costs = operating profit Operating profit less interest payments on bank loans or loan stock = profit before tax (pre tax profit)Pre-tax profit, less tax = net profit after taxPart of the net profit after tax may be used to pay a dividend with the balance being retained within the business for future investment. Profit marginProfit marginOperating profit as a percentage of sales (or turnover). To calculate profit margin, multiply operating profit by 100, and divide the result by turnover.Example: Company X made an operating profit of £500m on a turnover of £3,000m. Profit margin was therefore (500 x 100) / 3000= 16.66%Profit margin tells you about the underlying profitability of a company's trading activities, not whether it is actually making money for shareholders. Note that it is calculated before taking account of interest charges or tax. Further Suggestionsprofit before taxpre tax profit unitised with profits Excess profit Net profit margin Directly Unproductive Profit-Seeking Activities Accumulated profits tax paper profit Excess profits tax Gross profit Zero profit Profit forecast profits warning Book profit Profit Non profit endowment Profit shifting profit sharing scheme Trading profit Profitability index Unitised with profit endowment net profit after tax gross profit Risk adjusted profitability profit taking |
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