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Margin of profit
Margin of profitGross profit divided by net sales. Used to measure a firm's operating efficiency and pricing policies in order to determine how competitive the firm is within the industry. RELATED TERMS-------------------------------------- Gross A sum without deduction or set off, i.e., without deduction of taxes from a person's income. Profit The difference between the price received for a product and its cost (the price of the factors of production used to make it). Efficiency The degree and speed with which a market accurately incorporates information into prices. Order Instruction to a broker-dealer to buy, sell, deliver, or receive securities or commodities that commits the issuer of the "order" to the terms specified. Firm 1) Refers to an order to buy or sell that can be executed without confirmation for some fixed period. 2) A synonym for company. Industry A category used to describe a company's primary business activity, usually determined by the largest source of a company's revenues. SIMILAR TERMS-------------------------------------- Margin 1) Borrowed money that is used to purchase securities, practice referred to as 'buying on margin'. 2) The amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account. 3) In a general business context, the difference between a product's (or service's) selling price and the cost of production. 4) The portion of the interest rate on an adjustable-rate mortgage that is over and above the adjustment-index rate. Margin account (stocks) A brokerage account in which the broker lends the customer cash to purchase securities. Margin agreement The agreement governing customers' margin accounts. Margin call A demand for additional funds because of adverse price movement. Maintenance margin requirement, security deposit maintenance. Margin department The department in a brokerage firm that monitors customers' margin accounts, ensuring that all short sales, stock purchases, and other positions are covered by the margin account balance. Margin of safety The difference between price and value for a common stock. Margin requirement A performance bond paid upon purchase of a futures contract that protects the exchange clearinghouse from loss. Margin requirement (options) The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intraday price changes. Margin security A security that may be bought or sold in a margin account as defined in Regulation T. Margin stock Any stock listed on a national securities exchange, any over-the-counter security approved by the SEC for trading in the national market system, or appearing on the Board's list of over-the-counter margin stock and most mutual funds. Margin trading Buying securities, in part, with borrowed money. Marginal The margin is the range between the sale and purchase price or the range between debit and credit interest rate or with an Arbitrage, the price difference at the different trading places. Marginal cost The additional cost incurred by producing one more unit of a product. Marginal efficiency of capital The percentage yield earned on an additional unit of capital. Marginal product The increase in output resulting from the use of an additional unit of an input or factor of production. Marginal propensity to consume The proportion of additional disposable income that is spent on additional consumption. Marginal propensity to save The proportion of additional disposable income that people choose to save. Marginal revenue The change in total revenue resulting from increasing sales by one unit. Marginal tax rate The amount of tax paid on an additional dollar of income. As income rises, so does the tax rate. Marginal utility The additional satisfaction derived from consuming a further unit of a commodity. PREVIOUS AND NEXT TERMS-------------------------------------- Margin 1) Borrowed money that is used to purchase securities, practice referred to as 'buying on margin'. 2) The amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account. 3) In a general business context, the difference between a product's (or service's) selling price and the cost of production. 4) The portion of the interest rate on an adjustable-rate mortgage that is over and above the adjustment-index rate. Margin account (stocks) A brokerage account in which the broker lends the customer cash to purchase securities. Margin agreement The agreement governing customers' margin accounts. Margin call A demand for additional funds because of adverse price movement. Maintenance margin requirement, security deposit maintenance. Margin department The department in a brokerage firm that monitors customers' margin accounts, ensuring that all short sales, stock purchases, and other positions are covered by the margin account balance. Margin of profit Margin of safety The difference between price and value for a common stock. Margin requirement A performance bond paid upon purchase of a futures contract that protects the exchange clearinghouse from loss. Margin requirement (options) The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intraday price changes. Margin security A security that may be bought or sold in a margin account as defined in Regulation T. Margin stock Any stock listed on a national securities exchange, any over-the-counter security approved by the SEC for trading in the national market system, or appearing on the Board's list of over-the-counter margin stock and most mutual funds. We thank you for using the Financial Dictionary to search for Margin of profit. If you have a better definition for Margin of profit than the one presented here, please let us know by making use of the suggest a term option. This definition of Margin of profit may be disputed by other professionals. Our attempt is to provide easy definitions on Margin of profit and any other medical topic for the public at large.
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