Tag: Gross Profit
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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 principle. Lack of efficiency drives up fuel costs, loss of time in hauling; increased maintenance and repairs, and finally…
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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 numbers.
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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 a greater return on equity.
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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: 1) Low-Volume, Hi-Margin, 2) Hi-Volume, Hi-Margin, 3) Low-Volume, Low-Margin and 4) Hi-Volume, Low-Margin.
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Profit
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 paid. However, this is not correct.
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Fixed Costs – Explanation and Examples
‘Fixed costs’ is a business term used mostly in cost accounting. It has several meanings based on its usage. The most common definition associated with fixed costs is expenses that must be paid regardless of production or sales volume. The best example is rent for a company. It doesn’t matter whether you produce or sell one widget…
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QuickBooks in Construction Accounting – Transfer Work in Process to Cost of Goods Sold
QuickBooks does not have a seamless subroutine to transfer costs from construction in process control account to the profit in loss statement’s cost of construction section. Therefore, the accountant has to export data to a spreadsheet and then sum the respective functional costs of materials, subcontractors, labor, land etc. and then make a general journal…
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How Much is a Fair Profit? Part III of V – Risk
A third factor in determining a fair profit percentage is risk. Risk is divided into two types. The first is insurable and the second is uninsurable risks. Insurable risks are mitigated and have very little to no effect on the profit formula due to transferring the risk to a third party known as the insurance underwriter. Uninsurable…
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Format of the Profit and Loss Statement for Service Related Businesses
Service related businesses require a different format than the traditional profit and loss statement AKA the income statement. The traditional profit and loss focuses on sales of products and a corresponding cost of goods sold section to help the reader evaluate the gross margin. But in service, the owner needs a profit and loss statement…
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How Much is a Fair Profit? Part I of V – Owner Compensation
A fair profit for a small business is between 9% and 37%.