Saturday, 15 April 2017

Profit Margin - Way to Increase Gross & Net Profit margin

Profit margin

A Profit margin is a profitability ratio calculated as net income divided by revenue, or net profits divided by sales..

 Introduction to Profit Margin

Great small profit margin on each sales transaction is determined by these two factors i.e. net sales operating income. Great small business profit or net operating income depends on revenues from sales and the magnitude of the effort costs (operating expenses).

The amount of certain operating expenses with the profit margin can be enlarged with sales, or by a certain number of sales, profit margin can be zoomed in or out by pressing operating expenses.

Thus, to magnify profit margins there are two alternatives in an effort to increase profit margins, namely:

  1. By adding the cost of the business (operating expenses) until a certain level of sales achieved by the profuse or in other words, the extra sales must be greater than the additional operating expenses.
  2. Change of the magnitude of the sales can be caused due to the change in sales price per unit in the sales volume in units of certain already (fixed) or due to the vast increase of sales in the unit if the price level per unit of product is already certain.

Thus it can be said that the notion of raising the level of sales here can mean income and enlarge sales with way, as follows:

  1. Enlarge the sales volume in units at the level of sales prices of certain goods.
  2. Raise the per unit sales price level on broad product sales in a particular unit.

By reducing the revenue from sales to some degree by the presence of a reduction in the maximum expenses operating, or otherwise reduce the cost of business is relatively greater than the decline revenue and sales. Although the number of sales during a certain period rather than diminish, but since keep in mind accompanied a more comparable operating expenses then the consequence is that the margin the greater the profit.

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