Join Rudolph Rosenberg for an in-depth discussion in this video The gross margin percentage levers, part of Financial Analysis: Analyzing the Bottom Line with Excel.
…Gross margin percentage, has three main ways of changing.…Either revenue changes, cost changes, or product mix, changes.…The last one, product mix, is actually derived from revenue and cost changes.…But it is so…key to our analytics, that it deserves to be elected to the status of primary lever.…Revenue can change even through your own decision of increasing or…decreasing prices, or through giving discounts to your customers.…
Costs can change due to an infinite number of reasons.…Our pen example, could be impacted by changes in the prices of crude oil,…which is a key component, of plastic.…It could also be impacted by shortages of products, which would drive up prices and…therefore increase your costs.…So really, anything could be the reason for a cost increase.…It is not necessarily something you can control.…But it is definitely your problem to resolve, in the sense that,…if your gross margin goes down due to your costs going up,…you will have to devise a plan to generate more margin.…
You could increase your prices, not an easy thing to do,…
Also check out the companion course, Financial Analysis: Analyzing the Top Line with Excel.
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- Finding data points
- Prepping data
- Calculating standard cost and gross margins
- Analyzing overall gross margin performance
- Analyzing individual and overall expenses