As I Am Business Management Student I Want To Know About Margin?Answered
Hello Friends. I Have Some Confusion Regarding Margin Calculation, Markup, Gross Profit, And Gross Margin These are All Terms Looking the Same But Having Different formulas Is There One Who Can Tell Me The Perfect Usage And Meaning Of These Term Calculations. And Yes There Is One Online Tool Where the Developer Made Some Great Tool At One Place. There Is a Lot of thing on the same page which also save our time to calculate. Source Site: https://www.margincalculator.us/
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1 answer
There are many kinds of margin in business:
Profit Margin = Income/Revenues, so if you make $30 on a $100 of sales your PM = 30%
Gross Margin= Net Sales / Cost of Goods Sold, so if you sell $100 but your COGS is $60, then your Gross Margin is $40. Cost of Good Sold = How much is costs to make the item in terms of material and labor. But doesn't account for selling costs, marketing costs, or internal costs of admin.
Margin Call - Is something completely different. Some private and institutional investor use leverage to purchase stocks/bonds/commodities/derivatives. So just like home mortgages are secured by a down payment (5%-25%) plus pledges of the borrower to pay the month mortgage secured by their income and assets, the investor with the margin account, has to keep a certain amount of liquid assets in the margin account. If the portfolio of leveraged assets takes a dip during a sell off or say a hug hit because of a price swing like in this past weeks Crypto Currency debacle, "margin" calls kick in. And the investor has to "top off" their account with more liquid funds to keep it viable. If you ignore a margin call, the broker can sell off your assets until they meet the min. margin amount. The forced sale or liquidation can occur without your permission if you ignore margin calls.
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@CameronBameron Thanks a lot As You Elaborated on This Margin Calculation We Appreciated It Too Much And Yes We Will Ask And Search Our Questions On Quora And Reddit.