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Gross Profit

An accounting term used to identify the revenues less costs of goods or services provided. From this calculation is subtracted overhead costs to determine the profit of the company.

Gross Profit Margin


The difference between the sales price and the cost of the product or service rendered is known as gross profit margin in business.  It is traditionally the amount identified on the income statement or a tax return as the amount earned after cost [...]

Net Profit Margin


The net profit margin reflects the profitability of the company as a percentage of net sales.   It is one of the performance ratios used in evaluating business.   Interestingly, some consider it the most important ratio.   These users of [...]

Inventory Turnover Rate


One of the many ratios used in business, the inventory turnover rate is often misunderstood, miscalculated and misused.  The traditional business course in academia explains that ideally the inventory turnover ratio (rate) is the highest number [...]

Business Dynamics of Hauling


One of the industries in the transportation sector is materials hauling.  This is your dump truck industry.  All of us see these trucks out on the highway usually hauling gravel or dirt.  To profit well, efficiency is the primary business [...]

Gross, Operational and Net Profit (Differences)


The word ‘Profit’ is used loosely in the business word. Profit refers to the amount earned net of costs in a transaction. The key is defining a transaction. There is the direct transaction whereby a customer purchases a product and so it [...]

Margins in Construction


I’ve been asked to identify the average margins in the construction industry.  Honestly, there is no such thing.   I tried and after several hours of research I couldn’t even get one of the types of contractors to have consistency in their [...]

Flipping Houses – Proper Inventory Turnover Rate


In your typical business operation, turning the inventory over as often as possible has several benefits.  First, it generally reduces overall costs, secondly, it generates greater profits and third, by increasing the profitability, the company has [...]

Types of Business Models


In business there are four distinct business models.  Just about any business can be identified with one of the four.  The following are the four types of business models: Low-Volume, Hi-Margin Hi-Volume, Hi-Margin Low-Volume, Low-Margin [...]

Absolute Dollars


In the hospitality industry, there is one financial tenet that takes precedence over any other business perspective.  In this industry, it is about putting the maximum number of dollars (ABSOLUTE DOLLARS) in the register after each day.  One of [...]



Profit refers the earnings from the business operations.  It customarily means the bottom line of the business income statement or its profit and loss statement.  For many business owners, it refers to the amount earned before income taxes are [...]
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