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Profit margin |
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Profit marginThe difference between what it costs to produce a product or service and the selling price.Profit 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.Profit marginIndicator of profitability. The ratio of earnings available to stockholders to net sales. Determined by dividing net income by revenue for the same 12-month period. Result is shown as a percentage. Also known as net profit margin.Profit margin Similar MatchesNet profit after taxNet profit after taxThe net profits of a company after taxation. This is the 'bottom line' that you often hear about. Dividends are paid out of net profits after tax, and the amount that isn't paid out is the retained profit. Profit sharing schemeProfit sharing schemeA scheme where part of a company's profits are paid to employees as a reward for loyalty and contribution to the company's success. The reward may be given via cash, shares or a combination of both. Profitability ratiosProfitability ratiosRatios that focus on how well a firm is performing. Profit margins measure performance with relation to sales. Rate of return ratios measure performance relative to some measure of size of the investment. Trading profitTrading profitThe profit earned on short-term trades of securities held for less than one year, subject to tax at normal income tax rates. Operating profitOperating profitA company's profit after deducting its operating costs from gross profit. Further SuggestionsNon profit endowmentGross profit profit taking Realized profit (or loss) unitised with profits gross profit Directly Unproductive Profit-Seeking Activities Excess profit Pretax earnings or profits Excess profits tax Net profit margin profit before tax Book profit Profitability index pre tax profit Profit sharing plan paper profit Profit Table Profit forecast profit and loss statement (P&L) Risk adjusted profitability Profit Range Full with profit endowment net profit Unitised with profit endowment |
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