1

margin

noun mar·gin \ ˈmär-jən \
Updated on: 8 Nov 2017

Definition of margin

1 :the part of a page or sheet outside the main body of printed or written matter
2 :the outside limit and adjoining surface of something :edge
  • at the margin of the woods
  • continental margin
3 a :a spare amount or measure or degree allowed or given for contingencies or special situations
  • left no margin for error
b (1) :a bare minimum below which or an extreme limit beyond which something becomes impossible or is no longer desirable
  • on the margin of good taste
(2) :the limit below which economic activity cannot be continued under normal conditions
c :an area, state, or condition excluded from or existing outside the mainstream
  • the margins of critical discourse
  • —Barbara L. Packer
  • living in society's margins
4 a :the difference which exists between net sales and the cost of merchandise sold and from which expenses are usually met or profit derived
b :the excess market value of collateral over the face of a loan
c (1) :cash or collateral that is deposited by a client with a commodity or securities broker to protect the broker from loss on a contract
(2) :the client's equity in securities bought with the aid of credit obtained specifically (as from a broker) for that purpose
d :a range about a specified figure within which a purchase is to be made
5 :measure or degree of difference
  • the bill passed by a one-vote margin

margined

play \-jənd\ adjective

Examples of margin in a Sentence

  1. Please write your name in the left margin of the page.

  2. a book with wide margins

  3. Mountains lie at the city's northern margins.

Recent Examples of margin from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'margin.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of margin

Middle English, from Anglo-French, from Latin margin-, margo border — more at mark


2

margin

verb

Definition of margin

transitive verb
1 a :to provide with an edging or border
b :to form a margin to :border
2 a :to add margin to
  • margin up an account
b (1) :to use as margin
  • margin bonds to buy stock
(2) :to provide margin for
  • margin a transaction
c :to buy (securities) on margin

Examples of margin in a Sentence

  1. the riverbed is margined by a flat beach of smooth rocks

First Known Use of margin

1715


Financial Definition of MARGIN

margin

What It Is

The term margin has two main definitions. The first refers to the ratio of profit to revenue. The second refers to money borrowed from a brokerage firm in order to leverage an investment.

How It Works

Margin as a Financial Ratio
Let's assume Company XYZ records $1 million in net income for 2008 and $10 million in sales. By using the formula described above, we can calculate that Company XYZ has a $1,000,000/$10,000,000 = 10% net profit margin. We can determine from this number that XYZ keeps 10% of the revenue it generates or for every $1 XYZ generates in revenue, it keeps $0.10 in profit.

Borrowing Money on Margin
Let's assume you have $2,500 and Company XYZ trades at $5 a share. In a regular brokerage account, you would be able to purchase 500 shares. If XYZ were to appreciate by $10, you would make $5,000 and earn a respectable 200% gain.

But with a margin account, you could essentially borrow money from the brokerage firm and collateralize the loan with the Company XYZ shares. Margin requirements for equities are normally 2 to 1 for the average investor, meaning you purchase double what your cash balance is.

With the $2,500 from the previous example, an investor with a margin account would be able to purchase $5,000 of Company XYZ or 1,000 shares. That same $10 price move would mean you now make $10,000 and earn a 300% return.

But margin is a double-edged sword, and losses are also magnified. Additionally, if the investor's equity in the account drops past a certain point, say 25% of the total purchase amount (called the maintenance margin), the brokerage firm may make a margin call, meaning that within a few days you must deposit more cash or sell some of the shares to offset all or part of the difference between the actual stock price and the maintenance margin.

Why It Matters

Financial Ratio
Margins measure efficiency. The higher the operating margin, the more profitable per dollar received a company's core business is.

Several things can affect operating margin (such as pricing strategy, prices for raw materials, or labor costs), but because these items directly relate to the day-to-day decisions managers make, operating margin is also a measure of managerial flexibility and competency.

It is also important to note that some industries have higher labor or materials costs than others. This is why comparing operating margins is generally most meaningful among companies within the same industry, and the definition of a "high" or "low" ratio should be made within this context

Borrowing Money on Margin
Margin accounts allow investors to make investments with their brokers' money. They act as leverage and can thus magnify and gains. But they can also magnify losses, and in some cases, a brokerage firm can sell an investor's securities without notification or even sue if the investor does not fulfill a margin call. For these reasons, margin accounts are generally for more sophisticated investors who understand and can handle the risks involved.



MARGIN Defined for English Language Learners

margin

noun

Definition of margin for English Language Learners

  • : the part of a page that is above, below, or to the side of the printed part

  • : the place where something (such as a piece of land) stops : the edge of something

  • : an extra amount of something (such as time or space) that can be used if it is needed


MARGIN Defined for Kids

margin

noun mar·gin \ ˈmär-jən \

Definition of margin for Students

1 :the part of a page or sheet outside the main body of print or writing
2 :1border 2 We walked along the margins of the forest.
3 :an extra amount (as of time or money) allowed for use if needed
  • We have a margin of five minutes before the bus leaves.
4 :a measurement of difference
  • They lost by a small margin.

Medical Dictionary

margin

noun mar·gin \ ˈmär-jən \

medical Definition of margin

1 :the outside limit or edge of something (as a bodily part or a wound)
2 :the part of consciousness at a particular moment that is felt only vaguely and dimly

Law Dictionary

margin

noun mar·gin \ ˈmär-jən \

legal Definition of margin

1 :the difference between net sales and the cost of the merchandise sold from which expenses are usually met or profits derived
2 :the amount by which the market value of collateral is greater than the face value of a loan
3 a :cash or collateral deposited in a regulated amount by a client with a broker who is financing the purchase of securities — see also regulation t
b :a deposit made with a broker by a client who is trading in futures


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