Asked in Marketing Advertising and Sales
Marketing Advertising and Sales
Is less sale and high profit margin is good?
January 13, 2011 9:24PM
if we are using skimming pricing strategy than this is good because in skimming we get substantial competitive advantage by launching a new product with different quality so it will be more beneficial for us to charge a high price.
Asked in Cooking Measurements
If your sale prize is 5.50dh ad cost is 3.25dh what is your profit margin?
Are profit margin and gross profit the same?
Not necessarily. There are three types of profit margins that are commonly used (they can be calculated off the Income Statement) Gross Margin: Subtracting the Cost of Revenue out of the Total Revenue gives us Gross Profit. Gross Profit Margin = Gross Profit/Total Revenue. Operating Margin: Gross Profit less Operating Expenses gives us Operating Profit. Operating Profit Margin = Operating Profit/Total Revenue. Net Margin: Income before tax less Income Taxes Paid gives us Net Income. This is often called the "bottom line" of the company and is one of the primary indicators of a company's performance. Net Margin = Income/Total Revenue. Typically though, when people talk about profit margin, they usually mean net margin. But it's always wise to double check.
Asked in Business Accounting and Bookkeeping
What if the gross profit margin is lower than the benchmark?
Asked in Business Accounting and Bookkeeping
What is a Pro-forma contribution margin income statement?
What is profit margin a measure of?
Profit margin is a measure of cost of goods combined with the cost of sales versus revenue from the goods sold. For example, if a retailer pays a wholesaler $1.00 for an item and the cost of selling the item is $.50 and the retail revenue from the sale is $2.00, then the profit margin for that item is 25% ($.50 gross profit divided by $2.00 revenue). The net profit is even less when the cost of such items as taxes, interest, and amortization are included in the cost algorithm.
What happens when the contribution margin rises?
How do you determine the missing figures Fixed costs 50000 Variable Costs 70000 Sales Contribution margin Contribution ratio 30 percent Net profit or loss before tax?
Asked in Economics
How consumer demand affect business?
if demand for anything is more than that product will sell more, if there is no demand for an item then that will not sale.so if sales are more there would be more profit ,if sales are less profit will also less. more profit means a good business and less profit means that business is not in a good position. i hope now u can understand it.shortly more consumer demand more good business,less consumer demand less business.
What is the difference between margin and margin?
Profit margins are important if your suppliers keep raising the price of the product you need to sell or product you need for manufacturing. Margins are the differnt changes in the cost to profit percentages. If you buy a case of cookies for 5 dollars and sell them each for 10 dollars profit percentage is a 200 % or 50 % mark up. So your supplier now charges 6 dollars and you still sell them for 10 dollars . Your cost to profit percentages drop. If you raise your prices . Then the cost to profit percentages rises. This fluctuations are called margins. Most distributors want you to eat the loss in these fluctuations because . because your changing the the supply and demand curve. Which state and that and increase in price changes the quantity demand. which in laymens term states that you will sell less. In which drop the profit of both you and your distributor. Which probably hurt the distributors more because of his overhead. Any time your raise a price of a product you slow the sale of that product. That why margins are important.
Asked in Business & Finance, Business Accounting and Bookkeeping, Certificates of Deposit, Financial Statements
Profit margin and turn over ratios vary from one another what industry characteristic account for these variations?
Profit margin and turn over ratios vary from one industry to another The above said statement is true. Profit margin A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings. Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage; a 20% profit margin, for example, means the company has a net income of $0.20 for each dollar of sales. Looking at the earnings of a company often doesn't tell the entire story. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving. For instance, if a company has costs that have increased at a greater rate than sales, it leads to a lower profit margin. This is an indication that costs need to be under better control. Imagine a company has a net income of $10 million from sales of $100 million, giving it a profit margin of 10% ($10 million/$100 million). If in the next year net income rose to $15 million on sales of $200 million, its profit margin would fall to 7.5%. So while the company increased its net income, it has done so with diminishing profit margins. Turn over ratio A measure of the number of times a company's inventory is replaced during a given time period. Turnover ratio is calculated as cost of goods sold divided by average inventory during the time period. A high turnover ratio is a sign that the company is producing and selling its goods or services very quickly. In the case of mutual funds, the percentage of a fund's assets that have changed over the course of a given time period, usually a year. Turnover ratio for a mutual fund is calculated by dividing the average assets during the period by the lesser of the value of purchases and the value of sales during the same period. Mutual funds with higher turnover ratios tend to have higher expenses. Profit margin and Turn over ratios vary depending on the Company's Policy strategies and the Technology they are using. For example in Automobile sectors, the Profit margin and turn over ratios depends on the output, yield of the product they are manufacturing. This output & yield requires highly skilled professionals & technicians. The company is offering some highly salaried technicians or professionals. In this case, the high output results in high profit and the highly salaried persons with high technology results in low turn over ratios. In many of the small scale and medium scale industry, they usually prefer to have low salaried employees with the same skills getting the same output and yield with less technology. In case of IT fields, the Man power turn over ratio plays a major role in determining the companies Profit margin and Turnover ratios. In most of the IT companies Man power turn over ratio is very high compared to the other industries. This is because, they are focussing on the Project based Man power. They had to offer high salary for the experienced candidates even if the project gives them a low profit margin. Instead, they planned to have a fresher or a trainee to complete the project with low salary. This increases the profit margin and the turn over ratio but they are facing high Man power turn over ratio.
Is economic profit always less than accounting profit?
What is the difference in gross profit and net profit?
Asked in Business Accounting and Bookkeeping
Importance of cost volume profit analysis?
Importance of Cost Volume Profit (CVP) Analysis:The most profitable combination of variable cost, fixed cost, selling price and sales volume can be found with the help of cost volume profit analysis. If fixed costs can be reduced by a greater amount, the profits can sometimes be increased by reducing the contribution margin. More commonly, however, we have seen that the way to improve profits is to increase the total contribution margin figure, Sometimes this can be done by reducing the fixed costs (such as advertising) and thereby increasing volume; and some times it can be done by trading off variable and fixed costs with appropriate changes in volume. Many other combinations of factors are possible. The size of the unit contribution margin (and the size of the contribution margin ratio - CM ratio) is very important. For example, the greater the unit contribution margin, the greater is the amount that a company will be willing to spend to increase unit sales. This explains in part why companies with high unit contribution margin (such as auto manufacturers) advertise so heavily, while companies with low unit contribution margin (such as dishware manufacturers) tend to spend much less for advertising. In short, the effect on the contribution margin holds the key to many decision.