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Market share represents the percentage of an industry, or markets total sales, that is earned by a particular company over a specified time period. Market share is calculated by taking the companys sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company in relation to its market and its competitors.
A companys market share is its portion of total sales in relation to the market or industry that it operates within. For example, if a company sells $100 million in tractors per year domestically, and the total amount of tractors sold in the U.S. is $200 million, the companys US market share for tractors would be 50%.
Investors and analysts monitor increases and decreases in market share carefully, because this can be a sign of the relative competitiveness of the companys products or services. As the total market for a product or service grows, a company that is maintaining its market share is growingrevenuesat the same rate as the total market. A company that is growing its market share will be growing its revenues faster than its competitors.
Market share increases can allow a company to achieve greater scale with its operations and improve profitability. A company can try to expand its share of the market, either by lowering prices, using advertising or introducing new or different products. In addition, it can also grow the size of its market size by appealing to other audiences ordemographics.
The calculation for market share is usually done for specific countries, such as a Canada-only market share or U.S.-only market share. Investors can obtain market share data from various independent sources, such as trade groups and regulatory bodies, and often from the company itself. However, some industries are harder to measure with accuracy than others.
All multinational companies measure success based on the market share of specific markets. China has been an important market for companies, as it is still a fast-growing market for many products. Apple, Inc., for example, uses its market share numbers in China as a key performance indicator for the growth of its business. Apples market share for Chinas smartphone market fell from 13.6% at the end of 2015 down to 9.6% for 2016. Apple sales fell in China, despite the overall Chinese smartphone market growing by 9% in 2016. Apple sales were down in China that year as it failed to launch a new iPhone, and then it further lost market share as a number of mid-range smartphones were launched by Chinese competitors OPPO and vivo.
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Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business.
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Profit margin is a profitability ratios calculated as net income divided by revenue, or net profits divided by sales.
Mutual funds combine money from many investors to invest in a portfolio of stocks, bonds or other securities.
Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the …