From the course: Financial Analysis: Making Business Projections
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Combining product performance with product margins - Microsoft Excel Tutorial
From the course: Financial Analysis: Making Business Projections
Combining product performance with product margins
Now that we have defined the gross margin levels we will be using for our margin projection, we need to combine it with our product revenue performance projected in the previous chapter. To do so, there is nothing simpler. We just need to multiply our product revenue projection with our product margin percentage projection. For example, if we have planned to generate 10,000 dollars of revenue with high-end pens and that we have a forecasted margin of 30 percent for that product then our gross margin forecast for next year on high-end pens is going to be 30 percent times 10,000 dollars which is equal to 3,000 dollars. You then just need to apply those percentages to your product forecasts for all of your product.
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