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It means that business has not perform upto banchmark performance and either company has less sales or more expenses due to which profit margin is less then market benchmark rate.

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11y ago

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Why a business may not ahieve its targeted gross margin?

Cost of goods sold may have been higher than expected or sales prices may have been lower than expected. Remember the Gross margin is sales less cost of goods sold. Say $100-$50=$50 gross margin (50%). If they only sell for $90 instead of $100 the margin would be $90-$50=$40. Or if costs were higher you might have ended up with $100-$60=$40. Either one would reduce the gross margin.


What is a Good profit margin for country club?

A good profit margin for a country club typically ranges from 10% to 30%, depending on the club's location, membership size, and amenities offered. Higher-end clubs with extensive facilities and services may see margins at the upper end of this range, while more casual or budget-friendly clubs might operate on the lower end. Effective management of operational costs and strategic pricing can help achieve and maintain a healthy profit margin.


Why a company may not achieve its target gross margin?

Mark up is lower than desired or large impairment losses of inventory. Stock theft or stock damage could be a reason.


What is the average profit margin for a security company?

The average profit margin for a security company typically ranges from 5% to 15%, depending on various factors such as the type of services offered (e.g., physical security, cybersecurity, or monitoring services) and the operational efficiency of the company. Companies focusing on high-tech security solutions may experience higher margins due to lower labor costs and increased scalability. Additionally, market conditions and competition can also significantly influence profit margins in the security industry.


What is the effect on net profit if opening stock is overvalued?

If the opening stock is overvalued, it leads to an inflated cost of goods sold (COGS) when calculating net profit. This is because the higher opening stock increases the total inventory costs, thus reducing the gross profit. Consequently, the overall net profit will be lower than it should be, potentially misleading stakeholders about the company's financial health.

Related Questions

What is the meaning of gross profit margin?

Your Gross profit margin is the price you sell a product for minus the cost you paid for that product. It does not take into cinsideration the overhead of your business. If you sell a product for $100.00 and it cost you $90.00, you made $10.00 gross. If the cost of your overhead comes out to $20.00, you have a net profit of -$10.00. Many companies can have a gross profit and lose money overall. Obama's current plan is to ensure more corporations show a gross profit and lower net profit.


How does different inventory valuation method affect the profit of the manufacturing industries?

Revenue-Cost of Goods Sold(CGS)=Gross Margin. The valuation of inventory drives the cost of goods sold (CGS). The higher the value of your inventory, the higher your CGS, thus lower gross margin. The lower the valuation of your inventory, the lower your CGS, thus higher gross margins.


How does depreciation affect the profit margin?

Depreciation lowers the value of your assets. This in turn will lower your overall profit margin as well as your net worth.


If Cost of Goods Sold increase what happends to gross margin?

Basically, if Cost of Goods Sold increases, Profit will decrease unless the company/business increases how much they charge for the item and/or service.For example, if it originally cost a company $100 to make a computer that sold for $200, the profit margin is around $100. However if that cost of goods rises to say $150 and the company still on charges $200 for the product, then the profit margin is now only around $50. That is a crude and very unlikely scenario, but I hope it help explain what I was trying to say.


Why a business may not ahieve its targeted gross margin?

Cost of goods sold may have been higher than expected or sales prices may have been lower than expected. Remember the Gross margin is sales less cost of goods sold. Say $100-$50=$50 gross margin (50%). If they only sell for $90 instead of $100 the margin would be $90-$50=$40. Or if costs were higher you might have ended up with $100-$60=$40. Either one would reduce the gross margin.


What is the lower benchmark for 0.54?

.5


Is 30 percent a good profit margin?

A 30 percent profit margin is generally considered strong, especially in industries like retail and hospitality, where margins can be much lower. However, what constitutes a "good" profit margin can vary significantly by industry; some sectors, like technology or pharmaceuticals, may see higher margins. It's essential to compare it against industry benchmarks to assess its effectiveness accurately. Overall, a 30 percent margin typically indicates a healthy business performance.


What is a lower benchmark for 0.09?

It would be 0.05


What is a good net profit margin for a clothing company?

I know for a fact that Walmart tries to make 50 points on most of it's items at a minimum. As a small clothing retailer, I target a blended profit margin of 40 points, to keep my prices lower than the competition. I maintain a very minimal overhead.


What is a lower benchmark for 0.21?

0.20


What is a Good profit margin for country club?

A good profit margin for a country club typically ranges from 10% to 30%, depending on the club's location, membership size, and amenities offered. Higher-end clubs with extensive facilities and services may see margins at the upper end of this range, while more casual or budget-friendly clubs might operate on the lower end. Effective management of operational costs and strategic pricing can help achieve and maintain a healthy profit margin.


What is A declination diagram is a part of the information?

In the lower margin of most larger maps