Definition

Noun The ratio of gross profit to net sales, expressed as a percentage. It is a key financial metric used to measure a company's profitability by showing how much profit is generated from each dollar of sales revenue, after accounting for the cost of goods sold.

Usage

This term is used primarily in business, finance, and accounting contexts to analyze and discuss the profitability of a company, product line, or specific transaction. It indicates operational efficiency.

Examples

• The company's margin of profit increased significantly after it optimized its supply chain.
• Analysts were concerned about the shrinking margin of profit in the retail sector.
• A high margin of profit suggests that a company has good control over its production costs relative to its selling prices.

Advanced Usage

• Operating Margin: A more specific term referring to profit margin calculated using operating income (profit after operating expenses but before interest and taxes).
• Net Profit Margin: A different, more comprehensive ratio that uses net income (profit after expenses, including taxes and interest) divided by revenue.

Variants and Related Words

• Profit Margin: A more common and general synonym for "margin of profit."
• Gross Margin: A term often used interchangeably with "margin of profit," as both typically use gross profit in the calculation.
• Margin Call (n): A related but distinct financial term where a broker demands an investor deposit additional funds when the value of securities held as collateral falls below a required level.

Synonyms

• Gross Profit Margin
• Gross Margin
• Profit Margin (in its gross profit context)

Antonyms

• Loss
• Negative Margin

Related Phrases

• To improve/boost the margin of profit: To take actions to increase this ratio.
  • The new strategy aims to improve the margin of profit by 5%.
• A thin/narrow margin of profit: Describes a very low profitability ratio.
  • Supermarkets often operate on a very thin margin of profit.
• A healthy/wide margin of profit: Describes a strong, desirable level of profitability.
  • The software industry is known for its healthy margins of profit.

Noun

1. the ratio gross profits divided by net sales