economic terms is often ambiguous and confusing.Founded in them intuitive sense, but publicly explain his words, without preparation, who rarely turns.But in the case of an exception to this rule.Often, the term is familiar, and in-depth study of its becoming clear that everything its value known only to a narrow circle of professionals.
heard all, but few know
Take for example the term "margin".Word is simple and can be said to everyday.Very often it is present in the speech of people far from the economy or the stock market trading.
majority believes that the margin - the difference between any uniform rates.In everyday communication the word is used in the discussion of trade profit.
Few people know absolutely all the values of a sufficiently broad concept.
However, it is necessary to understand the modern man in every sense of the term, to suddenly find themselves in the moment "not lose face."
margin in the economy
Economic theory says that the margin - the difference between the price of the product and its cost.In other words, it reflects how effectively the activities of the company contributes to the transformation of revenue into profit.
margin - a measure of the relative, it is expressed as a percentage.
Let's see how to calculate the margin:
Margin = Profit / Revenue * 100.
The formula is simple enough, but in order not to get confused in the beginning of the study term, consider a simple example.The company operates with a margin of 30%, which means that each ruble proceeds up 30 cents net profit, while the remaining 70 cents - the cost.
In analyzing the main indicator of profitability of both activities is the gross margin.The formula to calculate it is the difference between revenue from sales in the period and variable costs of production of these products.
It is only the level of gross margin does not allow for a full assessment of the financial condition of the company.Also, with his help can not be fully analyzed and some aspects of its activities.It is an analytical indicator.He demonstrates how the success of the company as a whole.Gross margin created by the labor of employees spent on the production of products or the provision of services.
worth noting one more thing that is sure to be taken into account when calculating such a figure as "gross margin".The formula may take into consideration the income is realizable business enterprise.These include the write-off of receivables and payables, non-commercial provision of services, income from conducting housing and communal services and so on. D.
extremely important for the analyst to calculate gross margin, as this indicator is generated net profit of the company, and in the futureand development funds.
In economic analysis, there is another concept similar to the gross margin, it is called "margins" and shows the profitability of sales.That is, the share of profit in total revenues.
profit margin of the bank and its sources demonstrates a number of indicators.To analyze the work of such institutions accepted to count as many as four different margins:
credit margin is directly related to the operation of credit contracts, defined as the difference between the amount specified in the document, and actually handed out.
bank margin is calculated as the difference between interest rates on loans and deposits.
Net interest margin is the key indicator of the effectiveness of banking.The formula to calculate it looks like the odds ratio of fee income and expenditure of all transactions for all the bank's assets.Net margin can be calculated on the basis of how all of the assets of the bank, and only involved in work at the moment.
Warranty margin - the difference between the estimated value of collateral and the amount granted to the borrower.
These different values
course, the economy does not like ambiguity, but in the case of the use of the term "margin" that happens.Of course, in the territory of the same state all analytical reports entirely consistent with each other.However, the Russian understanding of the term "margin" in the trade is very different from the European.The reports of foreign analysts, it is the ratio of profit from the sale of goods to its selling price.In this case, the margin is expressed as a percentage.Use this value to assess the relative efficiency of the trading activity of the company.It is worth noting that the European attitude to the calculation of the margin is fully consistent with the fundamentals of economic theory, which was written above.
In Russia, this term is understood the net profit.That is, to make calculations, simply replace one term by another.The majority of our compatriots margin - the difference between the proceeds from the sale of goods and overhead costs for its production (acquisition), delivery, implementation.It is expressed in rubles or other friendly settlement currency.It may be added that the ratio of margin among professionals is not much different from the principle of the use of the term in everyday life.
The margin differs from the trade mark-up?
Regarding the term "margin", there are a number of common misconceptions.Some of them have already been described, but the most common we have not yet touched.
Most often confused with the indicator margin trading margin.Identify the difference between them is very simple.The margin is the ratio of profit to the cost.For information on how to calculate the margin, we have already mentioned above.
illustrative example will help to dispel doubts arising.
For example, the company bought goods for $ 100 and sold it for 150.
calculate the trading margin (150-100) / 100 = 0.5.The calculation showed that the mark-up is 50% of the value of the goods.In the case of margin calculation would be as follows: (150-100) / 150 = 0.33.The calculation showed margin of 33.3%.
correct analysis indicators
For professional analyst is very important not only to be able to calculate the index, but also to give its competent interpretation.This is a complex job that requires a lot of experience
Why is this so important?
Financial results are conditional enough.They impact assessment methods, accounting principles, the conditions in which the company operates, changes in the purchasing power of the currency, and so on. D. Therefore, the result of calculations can not be directly interpreted as "bad" or "good."Always perform additional analysis.
margin in the stock markets
Exchange Margin is a very specific indicator.At the professional slang of brokers and traders it does not mean the profit, as in all the above cases.The margin in the stock markets is becoming a kind of collateral for transactions, and the service of such trading is called 'margin trading'.
principle of margin trading is as follows: at the conclusion of the transaction the investor does not pay the full amount of the contract completely, it uses borrowed money your broker and his own account is debited only a small deposit.If the result of an operation carried out by the investor, the negative, the loss is covered by the security deposit.In the opposite situation, the profit is credited to the same deposit.
Margin transactions give the opportunity not only to make purchases with borrowed funds broker.The customer may also sell the borrowed securities.In this case, you will have to repay the debt by the same securities, but purchasing them is made a little later.
Each broker provides its investors with the right to perform transactions on their own margin.At any moment, he may refuse to provide such a service.
Benefits of margin trading
Through participation in margin transactions, investors get a number of advantages:
Ability to trade on the financial markets without having to account fairly large amounts.This makes the margin trading high-yield business.However, participating in the operations, it is worth remembering that the risk is not too small.
ability to obtain additional income while reducing the market value of shares (in cases where the client takes a securities broker).
to trade different currencies not necessarily have to deposit their funds in these currencies.
Risk Management To minimize the risk of margin at the conclusion of transactions, the broker assigns each of its investors and the amount of security margin.In each case, the calculation is made individually.For example, if after the transaction on the account of the investor there is a negative balance, the level of margin is determined by the following formula:
URM = (DC + CA-GI) / (DC + CA), where:
DC - money investors have made ondeposit;
CA - value of shares and other securities of the investor, received by the broker as collateral;
GI - payable to the investor's broker for the loan.
conduct foot protection is only possible if the margin level at least 50%, and unless otherwise provided in the agreement with the client.As a general rule, the broker may not enter into transactions that will lead to reduction of the margin below the set limit.
Besides the requirements for margin transactions in the stock markets put forward a number of conditions designed to streamline and secure the broker and investor relations.Specifies the maximum size of the loss, debt maturities, the terms of the contract change, and more.
understand the diversity of the term "margin" in the short term is difficult.Unfortunately, in one article it is impossible to tell about all areas of application.The above considerations are listed only the key points of its use.