Operating profit margin shows how much profit your business generates from its core activities after direct costs and operating expenses come out. Sales alone do not tell you whether the business runs efficiently. Instead, this percentage helps you compare...
Operational gearing helps us understand how the mix of fixed and variable costs can magnify changes in business profit. Two businesses can have the same sales, the same total costs and even the same starting profit, but react very differently when sales rise or fall....
Responsibility centre KPIs help you measure performance in the right parts of your business. Different teams, departments and business units control different things, so you should not measure them all in the same way. In this episode, we look at practical KPI...
When comparing sales turnover vs profit, it is easy to give turnover more importance than it deserves. A growing sales figure can tell us useful things about a business, but it does not automatically mean the business is financially successful. Turnover tells us the...
Effective KPIs help you understand how your business is really performing. Good key performance indicators do more than track sales. They help you monitor cash flow, profit, working capital, customer behaviour, operational speed and quality. In this episode, we look...
Cost based pricing, also known as cost plus pricing, is one of the simplest ways to set a selling price. We start with what a product or service costs us, add a markup and arrive at the price we charge the customer. Simple does not automatically mean best. Cost plus...
Gross profit explained simply: it is the money left from sales after you take away direct costs or cost of sales. Sales alone do not show whether your business is healthy. Instead, gross profit helps you understand pricing, costs, margins and whether each product or...
What is operating profit? It shows how much money your business makes from its core activities after you take away direct costs and operating expenses. Sales alone do not tell the full story. Instead, operating profit helps you understand how well the business...
But cash basis accounting and traditional accounting can produce different profit figures in the same year. Understanding why helps you make sense of your tax return, your business performance and what the numbers are actually telling you. We use a straightforward...
Choosing the right pricing strategy is not simply about deciding how much to charge. It is about choosing a pricing approach that supports your business goals, reflects the value you provide, covers your costs and helps you make sustainable profit. The right strategy...
Pricing rates can be difficult to get right. Charge too much and you may lose customers. Charge too little and you can end up working hard without making enough profit to build a sustainable business. Your price also sends a message. It says something about your...
Profit for tax is not always the same as the profit shown in your accounts. It is also not the same as the money sitting in your bank account. Your business profit, your accounting profit and your taxable profit can all tell different parts of the story. In this...
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