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What is margin

What is margin

The goal of every entrepreneur is to earn income.

To do this, he needed to put the consumer products / services, adding to the cost of trade mark.

The margin is the engine of the market system.

Defining margin

There are several definitions of margin. Margin - an important concept of the market economy, so depending on the area of ​​the market, the meaning of the word "margin" can be understood in different ways. In terms of general market margin - is synonymous with the word "profit", it can be measured both in rubles and as a percentage of the cost.
In the financial sphere, in the securities market, "margin" will be accepted as collateral, under which conducted the auction.

margin monopolies

The biggest margin incorporated in productsmonopolies. Due to the lack of competition and there is no "ceiling" prices. Those entrepreneurs who manage at least temporarily obtain a monopoly on a product, become the richest people and their companies thrive.
Natural monopolies occur in the areas of "firstnecessary. " Foodstuffs, public transport, energy necessary for everyone. Sometimes major manufacturers of goods and essential services conspire to knock out of the business of small entrepreneurs. The situation is simple: their cash reserves can simultaneously reduce the margins to zero (or even sell at a loss). Small producers do not have the cash reserves, are heavily dependent on cash flows. Buyers saw a huge decline in prices at the well-known players, beginners leave "out of work". When a small business fails, the major manufacturers are returning and increase margins at times, beating the cost.
In America, Europe and Russia have a systemregulation of natural monopolies. Regulate monopoly on software, technology is much more complex - leading enterprises protect themselves patent system. The whole loss-making business can be bought because of the patents that allow monopoly deploy improving margins.

Income tax for businesses

Tax margin is the most commonway state government funding. Employers must contribute to the development of the country: education, construction of roads, hospitals, detention of budgetary institutions. Since all income entrepreneur depends on the margin, many states, including Russia, have introduced income tax for entrepreneurs - Value Added Tax (VAT).
Since many entrepreneurs do not pay themselves a salary, income tax on wages would be meaningless. Therefore VAT is a reasonable way marginally taxation.

Trade with the "shoulder"

There is the concept of "margin trading". It is used in the financial sector. The Bank provides loan funds under the guarantee of available money or liquid (easily convertible into cash) financial instruments. Leverage - is the ratio of the amount of collateral for the loan ( "money in your pocket" proprietor) to the sum of the loan. Leverage or leverage can represented as 1:10 (available on a thousand rubles is given a loan of 10 thousand), 1:20, 1: 100, etc. Using the shoulder guarantees a margin allows financiers and traders to make a small difference in exchange rates and securities - spreads.

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