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Finance GlossaryNet Profit Margin
Net Profit Margin
Definition of Net Profit Margin
Net Profit Margin shows the portion of revenue that remains as profit once all operating costs, interest, and taxes have been deducted. It is expressed as a percentage and helps investors understand a company’s overall profitability and cost efficiency.
Related Terms
Equity Shares
Equity shares is a term used to describe stock of a company that’s issued via an Initial Public Offer (IPO), already issued and traded on the stock market, or freshly available through a Follow on Public Offer (FPO).
For a company, the goal of issuing equity shares is to raise money while investors who buy these equity shares get perks like voting rights, dividends, and even a share of the assets in case the company is liquidated.
For a company, the goal of issuing equity shares is to raise money while investors who buy these equity shares get perks like voting rights, dividends, and even a share of the assets in case the company is liquidated.
Venture Capital
Venture capital refers to funding provided to early-stage or high-growth companies with strong future potential but higher risk. For example, a venture capital firm investing in a fintech startup in exchange for equity expects substantial returns if the company scales successfully or goes public.
Limit Order
A limit order is an instruction that specifies the price at which a financial security should be bought and sold known as the limit price. The broker will execute the order only if the limit price is met. But there is no guarantee that a limit order will be executed since it is essentially in queue.
Expense Ratio
An expense ratio is a management fee that investors must pay for the services of the fund manager and their team. Mutual funds are handled by fund managers who take care of everyday stock analysis, buying & selling, and other activities. The expense ratio is a fee to compensate for this day-to-day management.
Record Date
The Record Date is the specific cutoff date set by a company to determine eligible shareholders for dividends, bonuses, stock splits, or rights issues. Investors must hold shares by the end of this date to qualify, even if the actual payout or entitlement occurs later. It ensures accurate distribution and is critical for retail investors to check before corporate actions.
Commodity Options
A commodity option is a contract that gives the buyer or seller the right but not the obligation to execute a trade for a commodity like copper, cotton, zinc, and others at a pre-agreed price and date. Commodity options are derivative contracts that require a trader to pay a premium in order to secure the “option”.
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