Other formulas for calculating sales profitability
Posted: Mon Jan 20, 2025 5:32 am
Let's also consider a few more formulas, for example:
ROS of sales depending on the profit margin
The costs of most firms consist of fixed and variable components, depending on the volume of production.
Let's imagine that Natalia decides brazil mobile phone numbers database to make more products for the holidays because she expects to increase sales. Because of this, her variable costs will increase during this period.
To understand whether such a strategy was justified, it is necessary to find ROS (return on sales) using the formula depending on the marginal profit, that is, calculate the difference between the existing revenue and the costs, which are related to variables. This is done as follows:
ROS = (Profit Margin / Revenue) * 100%
Let's say Natalia spent 200,000 rubles to purchase, transport, and package goods and move them to storage locations. The income minus taxes was 400,000 rubles. This amount characterizes the volume of marginal profit. Let's find the ROS coefficient using the formula: 400,000/200,000 × 100% = 50%.
ROS Sales by Gross Profit
This sales profitability ratio, using a formula that takes into account gross profit, allows you to understand whether a particular line of business is profitable or not, such as expanding the range of services or releasing a new product. It is defined as follows:
ROS = (Gross Profit / Revenue) * 100
Gross profit shows how much money an organization will have left after deducting from revenue the costs of purchasing raw materials, paying salaries, paying rent and transportation, and so on.
Let's figure out how to conduct an analysis. Let's imagine that Natalia decided to expand the range by adding handmade soap and bath salt. After a certain time, the revenue from the sale of salt reached 250 thousand rubles, and the gross profit was 90 thousand rubles. The revenue from the sale of soap was 340 thousand rubles, while the gross profit reached 110 thousand rubles.
ROS of sales depending on the profit margin
The costs of most firms consist of fixed and variable components, depending on the volume of production.
Let's imagine that Natalia decides brazil mobile phone numbers database to make more products for the holidays because she expects to increase sales. Because of this, her variable costs will increase during this period.
To understand whether such a strategy was justified, it is necessary to find ROS (return on sales) using the formula depending on the marginal profit, that is, calculate the difference between the existing revenue and the costs, which are related to variables. This is done as follows:
ROS = (Profit Margin / Revenue) * 100%
Let's say Natalia spent 200,000 rubles to purchase, transport, and package goods and move them to storage locations. The income minus taxes was 400,000 rubles. This amount characterizes the volume of marginal profit. Let's find the ROS coefficient using the formula: 400,000/200,000 × 100% = 50%.
ROS Sales by Gross Profit
This sales profitability ratio, using a formula that takes into account gross profit, allows you to understand whether a particular line of business is profitable or not, such as expanding the range of services or releasing a new product. It is defined as follows:
ROS = (Gross Profit / Revenue) * 100
Gross profit shows how much money an organization will have left after deducting from revenue the costs of purchasing raw materials, paying salaries, paying rent and transportation, and so on.
Let's figure out how to conduct an analysis. Let's imagine that Natalia decided to expand the range by adding handmade soap and bath salt. After a certain time, the revenue from the sale of salt reached 250 thousand rubles, and the gross profit was 90 thousand rubles. The revenue from the sale of soap was 340 thousand rubles, while the gross profit reached 110 thousand rubles.