Join Curt Frye for an in-depth discussion in this video Calculating gross profit margin and net profit margin, part of Excel 2007: Financial Analysis.
One of the most basic measures of profitability is how much money a company…makes on each item it sells.…You can analyze a company's profit by subtracting the cost of goods sold from…total revenue and then dividing that result by total sales revenue.…The result is the gross profit ratio.…A company's gross revenue ignores all expenses except the cost of goods sold.…In industry lingo, gross revenue is Earnings Before Interest, Taxes,…Depreciation, and Amortization or EBITDA.…So here in the worksheet, you can see that we have the Sales Revenue and…the Cost of Goods Sold.…
So again what we're going to do is subtract cost of goods sold from sales…revenue and then divide it by sales revenue to get the gross profit margin.…So = (B5-B6/B5), press Enter, and there is our ratio, 0.56.…You can calculate a company's gross profit margin for all of its products, but…you can also break the numbers down by product to get an idea of how efficiently…a product contributes to the company's bottom line.…Some companies follow what's called a Loss Leader Strategy, where they sell one…
Author
Released
8/25/2009- Building a financial worksheet with Pivot Tables
- Reviewing financial statements through common-sized balance sheets
- Calculating percentage change over time in financial statements
- Determining profitability ratios and return on investments
- Studying liquidity and activity ratios through an average collection period
- Computing the future value of an investment
Skill Level Intermediate
Duration
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Introduction
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Welcome1m 8s
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Disclaimer26s
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1. Designing a Financial Worksheet
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Avoiding common mistakes5m 39s
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2. Analyzing Cash Flows Using Excel Tables and Pivot Tables
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Pivoting a Pivot Table2m 22s
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Filtering a Pivot Table3m 11s
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3. Analyzing Financial Statements
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4. Calculating Profitability Ratios
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5. Calculating Liquidity and Activity Ratios
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6. Calculating Leverage Ratios
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Calculating the equity ratio1m 26s
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Calculating the debt ratio2m 57s
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7. Calculating the Effect of Interest Rates on Loan Repayment
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8. Determining Future Cash Flows
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Calculating present value2m 29s
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9. Forecasting Future Growth
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10. Determining Amortization and Depreciation Schedules
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Introducing amortization2m 20s
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Introducing depreciation2m 1s
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11. Analyzing Bond Investments
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Calculating a bond's yield2m 15s
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Conclusion
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Goodbye23s
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Video: Calculating gross profit margin and net profit margin