So when the yield curve is steeper, banks have a fatter future gross operating profit margin.
Excluding its listed finance arm, its net debt is 1.9 times its gross operating profit.
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The spread between short and long rates is effectively the gross operating profit margin banks can make on their next loans.
Twenty-five-year contracts signed in the early and mid-1990s had management fees as high as 3.5% of total revenues, plus 6-10% of gross operating profit.
The gross and operating profit margins expanded 657 and 553 basis points, respectively, to 27.63% and 9.0%.
Nonetheless, lower raw material costs pushed up the gross and operating profit margins by 356 and 73 basis points, respectively, to 25.14% and 6.73%.
However, first-half gross and operating profit margins fell from 53.2% and 33.9%, respectively, to 50.2% and 31.1% due to increased advertising and marketing expenses, more aggressive pricing and a greater proportion of sales from lower-margin products.
Taiwan Semiconductor also lowered its expectations for gross profit margin and operating profit margin by four percentage points each.
It now expects fourth-quarter gross profit margin to be in the range of 30.0% to 32.0%, and operating profit margin in the range of 17.0% to 19.0%, when it releases fourth-quarter results on Jan. 22.
Question Two: What gross profit goal do we need to achieve to accomplish our operating goals?
These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per share, and free cash flow.
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