Gross Profit

An accounting term used to identify the revenues less costs of goods sold or services rendered. From the gross profit result overhead costs are subtracted to determine the net profit of the company. Gross profit is used with both margin (percentage) and interacts with mark-up on costs to determine sales price. The following are articles explain this in more detail.

Gross Profit Margin

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 of sales a.k.a cost of goods sold, cost of services rendered, etc. is subtracted from sales (revenue).

Net Profit Margin

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 business ratios take a very simplistic approach towards business evaluation. 

Inventory Turnover Rate

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 possible. This higher value means the business operation is selling the product as fast as possible. This in turn signifies that the business is getting the best return on its financial investment into inventory.

Business Dynamics of Hauling

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 customer dissatisfaction. This article is an introduction to this industry as a part of the transportation sector of our economy.

Flipping Houses – Proper Inventory Turnover Rate

Turnover Rate with Flipping Houses

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. OK, this seems all well and good, but does turning the inventory over in the house flipping business as fast as possible generate the same benefits? 

Types of Business Models

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.

Absolute Dollars

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 the most misunderstood business dynamics of this industry is the higher than average fixed cost to run the company.

Profit

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.

Follow by Email
LinkedIn
Share