Blogs

Tip of the day – Market Capitalisation

Market capitalisation refers to the total pound market value of a company’s outstanding shares. Commonly referred to as “market cap,” it is calculated by multiplying a company’s shares outstanding by the current market price of one share. The investment community uses this figure to determine a company’s size, as opposed to using sales or total asset figures.

Using market capitalisation to show the size of a company is important because company size is a basic determinant of various characteristics in which investors are interested, including risk. It is also easy to calculate. A company with 20 million shares selling at £100 a share would have a market cap of £2 billion.

Tip of the day – Profit Margin

What is a ‘Profit Margin’

Profit margin is a profitability ratio calculated as net income divided by revenue, or net profits divided by sales. Net income or net profit may be determined by subtracting all of a company’s expenses, including operating costs, material costs (including raw materials) and tax costs, from its total revenue. Profit margins are expressed as a percentage and, in effect, measure how much out of every pound of sales a company actually keeps in earnings. A 20% profit margin, then, means the company has a net income of £0.20 for each pound of total revenue earned.

While there are a few different kinds of profit margins – including “gross profit margin,” “operating margin,” (or “operating profit margin”) “pre-tax profit margin,” and “net margin” (or “net profit margin”) – the term “profit margin” is also often used simply to refer to net margin. The method of calculating profit margin when the term is used in this way can be represented with the following formula:

Profit Margin = Net Income / Net Sales (revenue)

Other types of profit margins have different ways of calculating net income so as to break down a company’s earnings in different ways and for different purposes.

Profit margin is similar but distinct from the term “profit percentage,” which divides net profit on sales by the cost of goods sold to help determine the amount of profit a company makes on selling its goods, rather than the amount of profit a company is making relative to its total expenditures.

Tip of the day – Domination!

Have you ever been in a meeting when someone just does not stop talking?

When you start a meeting, let the group know you want everyone to speak. Tell the incessant talker to let others join the conversation and make sure you go back to those who get interrupted.

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Most of all, if you get interrupted say that you were not finished and you want to hear from others with their thougths on your points.

All sound obvious? Maybe, but if you do not lead the meeting this way you may as well close it out.