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What is more profitable high contribution margin ratio or low?
Wiki User
∙ 15y ago
Higher. It's your TR minus your Variable Costs over sales. So if you have a higher revenues coupled with low costs, you will have a higher contribution margin and more profitable.
Wiki User
∙ 15y ago
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Explain why buing on margin can be a profitable system?
Buying on margin is profitable in a bull market especially when the stocks pay a high dividend.
Importance of cost volume profit analysis?
Importance of Cost Volume Profit (CVP) Analysis:The most profitable combination of variable cost, fixed cost, selling price and sales volume can be found with the help of cost volume profit analysis. If fixed costs can be reduced by a greater amount, the profits can sometimes be increased by reducing the contribution margin.More commonly, however, we have seen that the way to improve profits is to increase the total contribution margin figure, Sometimes this can be done by reducing the fixed costs (such as advertising) and thereby increasing volume; and some times it can be done by trading off variable and fixed costs with appropriate changes in volume. Many other combinations of factors are possible.The size of the unit contribution margin (and the size of the contribution margin ratio - CM ratio) is very important. For example, the greater the unit contribution margin, the greater is the amount that a company will be willing to spend to increase unit sales. This explains in part why companies with high unit contribution margin (such as auto manufacturers) advertise so heavily, while companies with low unit contribution margin (such as dishware manufacturers) tend to spend much less for advertising.In short, the effect on the contribution margin holds the key to many decision.
Is a high or low unit contribution preferred for profitability?
a high unit contribution is preferred for profitability.
What is the noise margin for standard TTL gates?
The low state dc noise margin for TTL dates is 0.3v and the high state noise margin is 0.7v
Profit margin and turn over ratios vary from one another what industry characteristic account for these variations?
Profit margin and turn over ratios vary from one industry to another The above said statement is true. Profit margin A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings. Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage; a 20% profit margin, for example, means the company has a net income of $0.20 for each dollar of sales. Looking at the earnings of a company often doesn't tell the entire story. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving. For instance, if a company has costs that have increased at a greater rate than sales, it leads to a lower profit margin. This is an indication that costs need to be under better control. Imagine a company has a net income of $10 million from sales of $100 million, giving it a profit margin of 10% ($10 million/$100 million). If in the next year net income rose to $15 million on sales of $200 million, its profit margin would fall to 7.5%. So while the company increased its net income, it has done so with diminishing profit margins. Turn over ratio A measure of the number of times a company's inventory is replaced during a given time period. Turnover ratio is calculated as cost of goods sold divided by average inventory during the time period. A high turnover ratio is a sign that the company is producing and selling its goods or services very quickly. In the case of mutual funds, the percentage of a fund's assets that have changed over the course of a given time period, usually a year. Turnover ratio for a mutual fund is calculated by dividing the average assets during the period by the lesser of the value of purchases and the value of sales during the same period. Mutual funds with higher turnover ratios tend to have higher expenses. Profit margin and Turn over ratios vary depending on the Company's Policy strategies and the Technology they are using. For example in Automobile sectors, the Profit margin and turn over ratios depends on the output, yield of the product they are manufacturing. This output & yield requires highly skilled professionals & technicians. The company is offering some highly salaried technicians or professionals. In this case, the high output results in high profit and the highly salaried persons with high technology results in low turn over ratios. In many of the small scale and medium scale industry, they usually prefer to have low salaried employees with the same skills getting the same output and yield with less technology. In case of IT fields, the Man power turn over ratio plays a major role in determining the companies Profit margin and Turnover ratios. In most of the IT companies Man power turn over ratio is very high compared to the other industries. This is because, they are focussing on the Project based Man power. They had to offer high salary for the experienced candidates even if the project gives them a low profit margin. Instead, they planned to have a fresher or a trainee to complete the project with low salary. This increases the profit margin and the turn over ratio but they are facing high Man power turn over ratio.
What is the ideal ratio for total debt ratio?
Basically there is no absolute plug number. It differs from one firm to another. Say for instance: a starting fast growth High-tech firm normally will have higher ratio than a mature profitable one. The same goes from industry to industry: transportation VS pharmaceuticals. Conclusion: each firms has its own unique dept ratio, but what matter is, how efficient the dept is managed.
What are the advantages and disadvantages of a high leverage ratio?
disadvantages of a high leverage ratio in financial crisis
What is a High Ratio Cake?
A high-ratio (hi-ratio) cake is one that has a high ratio of sugar and liquid (usually eggs) to flour. High ratio cakes require a special shortening (called emulsified shortening) containing emulsifying agents to allow the mixture to hold such high amounts of sugar and liquids. Generally speaking, the process of making a high ratio cake includes blending your flour with emulsified shortening, then adding the liquids.
What is a high profit margin?
A high profit margin is a good indication that a business is doing well, and has financial stability. This also shows that the company has good control over its costs in relation to its income.
Titanium is useful because it has a high ratio?
Titanium is useful because it has a high strength to weight ratio.
How do you select net interest margin high or low?
Perhaps you know
Would you expect a company in a rapidly growing technological industry to have a high or low dividend payout ratio?
In rapidly growing industries companies tries to pay no or low dividend becasue they want to retain the profit for investment in future profitable opportunities.
