Gross profit is one of the most important things for business owners to understand. There are many terms that business owners need to understand to run well. By learning these terms, business owners can run their businesses well.
Moreover, terms that are relevant to the business. These terms are important to learn because they are closely related to business. One of the important terms to know is gross profit. By studying gross profit, you can get many things to help you run a business.
Previously, you must first understand what gross profit is. As you know, profit is the profit you get. However, what about gross profit? Is the gross profit a profit directly obtained by the business owner?
Gross profit is something different from net profit. If net profit is the profit that is obtained after calculating the various expenses incurred by the company for these business activities, gross profit is a different profit compared to it.
Gross profit itself is the profit that a company gets when the profit earned has been deducted from the costs incurred for selling the product or service. So you can say that gross profit is not a net profit obtained by a company.
However, getting your gross profit is arguably a good first step. This indicates that your business can make a profit even though it is still only in terms of sales. So that it can be said that gross profit is the profit obtained from sales activities only.
Gross profit itself is not only important to know to help calculate finances. There are several benefits that a business owner can get by knowing. The following are some of the advantage of knowing the gross profit for a business.
Gross profit itself is not without being influenced by other factors. Three factors influence it. The following are some of the influential factors in question.
Just like other calculations in business, you need a formula to help you determine the results of the calculation. The following is a formula that you can use to get gross profit for your business
Gross Profit = Product Sales - Cost of Goods Sold in Products
Only these two components are needed by a business in calculating gross profit. Let's study the case if it is implemented into an example
In a period of 1 year, PT Milana has succeeded in selling its products amounting to 500 million Rupiah. However, PT Milana has employee and operational salary expenses of 140 million Rupiah.
Marketing expenses during this period also spent around 80 million Rupiah. Meanwhile, the basic selling price of PT Milana in 1 year requires around 100 million Rupiah. How much was PT Milana's gross profit in that period?
Referring to the formula explained earlier, you only need 2 components to calculate gross profit. The two components are the amount of sales and the cost of goods sold required. Therefore, it can be concluded that the results are as follows:
Gross Profit = Sales – COGS
Gross Profit = 500,000,000 – 100,000,000
Gross Profit = 400,000,000
It's also quite easy to remember the formula because only two components are used. In contrast to net profit which requires other components such as salary expenses, rent expenses, and so on.
Those are brief explanations about gross profit and the formula you need to use. Apart from that, you also have to remember the factors that affect gross profit as mentioned. This will help you in several ways as previously mentioned.
Apart from financial and sales activities, you should also not forget the service aspect of doing business. You can use data analytics to help you process business data. In addition, there are customer care and broadcasts to help customers. For more information, visit Kokatto!