A:

A company's market share is its sales measured as a percentage of an industry's total revenues. Determine a company's market share by dividing its total sales or revenues by the industry's total sales over a fiscal period. Use this measure to get a general idea of the size of a company relative to the industry.

To calculate a company's market share, first determine a period you want to examine. It can be a fiscal quarter, year or multiple years. Next, calculate the company's total sales over that period. Then, find out the total sales of the company's industry. Finally, divide the company's total revenue by its industry's total sales.

For example, suppose you want to calculate a toy manufacturer's market share over one fiscal year. The toy manufacturer had total revenues of $20 million, and the toy manufacturing industry had total revenues of $200 million over one fiscal year. To find the toy manufacturer's market share, divide $20 million by $200 million. The manufacturer's market share is 10%.

Market share can also be used to compare similar companies within the same overall industry. For example, suppose another toy manufacturing business has total revenues of $40 million. This toy manufacturer has a 20% market share of the industry. This signals that this toy manufacturer out-competes the toy manufacturer from the previous example.

It is also possible to use market share over multiple periods to see how well a company fares against its competitors and whether the company is growing.

RELATED FAQS
  1. What is the relationship between marginal revenue and total revenue?

    Learn what total and marginal revenue are, how to calculate marginal revenue given total revenue, and how marginal and total ... Read Answer >>
  2. What is the difference between earnings and profit?

    Read about the differences between a company's earnings and its profit, and learn how the gap between earnings and profit ... Read Answer >>
  3. How do companies use marginal analysis?

    Find out how and why companies rely on marginal analysis, particularly when developing a cost-benefit approach for future ... Read Answer >>
  4. What are the different types of costs in cost accounting?

    Cost accounting aids in decision-making processes by allowing a company to evaluate its costs. Some types of costs in cost ... Read Answer >>
  5. What is the point of calculating gross sales?

    Learn how doing simple gross sales and gross profit calculations can serve to help change a company's profit ratio and overall ... Read Answer >>
Related Articles
  1. Insights

    Wal-Mart, Toys R Us Can't Keep Up With the Demand for Fidget Spinners

    Fidget spinners are all the rage with young children, forcing Walmart and Toys R Us to scramble to capitalize on the trend.
  2. Investing

    Target Looking to Re-gain Market Share with Toys (TGT, WMT)

    Target has been under-performing its peers. Why?
  3. Investing

    How Amazon Is Destroying Toys R Us

    As cash-heavy rivals step up their digital game, Toys R Us is forced to focus on its debt pile.
  4. Insights

    5 Most Financially-Lucrative Toy Fads

    These toys were huge hits during the holiday season.
  5. Small Business

    5 Most Profitable Toys Of Past Christmases

    Learn how some of the most popular toys of all time affected their companies' performance.
  6. Insights

    Should You Resell Toys At Christmas For Extra Money?

    It may put a few extra dollars in your pocket, but it isn't going to replace your primary source of income.
  7. Investing

    Key Financial Ratios for Manufacturing Companies

    An investor can utilize these financial ratios to determine whether a manufacturing company is efficient, profitable and a good long-term investment option.
  8. Investing

    Can Mattel Catch Up to Hasbro? (MAT,HAS)

    As investors sell Mattel's shares on a major Q4 miss, the toy maker's new CEO focuses on innovation.
  9. Investing

    Toy Co. Earnings: Hasbro vs. Mattel

    Hasbro has gained against Mattel as its rebranding campaign, product diversification initiative and Disney contract win reap top and bottom line beats.
  10. Investing

    Are These the Top 4 Game & Toy Stocks of 2016?

    These four toymaker stocks have the potential to deliver moderate to significant stock appreciation plays in 2016.
RELATED TERMS
  1. Sales Per Share

    A ratio that computes the total revenue earned per share over ...
  2. Advertising Allowance

    Money that a product manufacturer or service provider pays to ...
  3. Share Turnover

    A measure of stock liquidity calculated by dividing the total ...
  4. Per Share Basis

    A measure used in the financial world to illustrate the quantity ...
  5. Market Capitalization

    The total dollar market value of all of a company's outstanding ...
  6. Earnings Per Share - EPS

    Earnings per share (EPS) is the portion of a company's profit ...
Hot Definitions
  1. Asset Allocation

    An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's ...
  2. IRR Rule

    A measure for evaluating whether to proceed with a project or investment. The IRR rule states that if the internal rate of ...
  3. Short Covering

    Short covering is buying back borrowed securities in order to close an open short position.
  4. Covariance

    A measure of the degree to which returns on two risky assets move in tandem. A positive covariance means that asset returns ...
  5. Liquid Asset

    An asset that can be converted into cash quickly and with minimal impact to the price received. Liquid assets are generally ...
  6. Nostro Account

    A bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro accounts ...
Trading Center