From the course: Financial Analysis: Making Business Projections
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Gross-margin projection basics - Microsoft Excel Tutorial
From the course: Financial Analysis: Making Business Projections
Gross-margin projection basics
Gross margin projection is actually much simpler than revenue projection. As a reminder, gross margin is what is left over from your revenue once you have paid all the costs that relate to the production of your goods. This allows you to find how profitable each individual sale is. In this chapter, we will mostly use gross margin in its percentage form in order to prepare the projection. Gross margin percentage is simply the result of dividing gross margin by revenue for a given period of time. Gross margin is really influenced by four things. The price you set your products or services at, the cost of producing your products or rendering your service, the discounts you give to your customers which results in a lower selling price and therefore less margin, and the mix of products you sell, since you'll be making more margin in years during which you sold more high margin products. The first three points relate to the margin you will be generating on each of your products. So if we go…
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