The company with the highest profit margin is by definition the lowest cost operator, as the lowest cost operator has a better chance of survival if business conditions deteriorate.
When investing, we are looking for a relatively High Profit Margin for a Long Term Holding stock and a relatively Low Profit Margin for a Turn Around stock.
How inflation will effect the share price?
Inflation will lead to low earning or profit to a company. Inflation means too much money is in the market that leads to money's value become lower, material cost become higher. With higher overhead, profit margin become lower. With lower price earning ratio, people/investor become less interested to shares, the share price will fall.
What is the sign of inflation?
1. Commodity Price (oil, rubber, steel) increase.
2. Interest rate high
Inflation will lead to low earning or profit to a company. Inflation means too much money is in the market that leads to money's value become lower, material cost become higher. With higher overhead, profit margin become lower. With lower price earning ratio, people/investor become less interested to shares, the share price will fall.
What is the sign of inflation?
1. Commodity Price (oil, rubber, steel) increase.
2. Interest rate high
People do not wish to borrow loan with a high interest, then business is hard to expand, economic growth is under control. High interest is to control inflation.
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