6 Matching Annotations
1. Nov 2018
2. en.wikipedia.org en.wikipedia.org
1. Net sales = gross sales – (customer discounts, returns, and allowances) Gross profit = net sales – cost of goods sold Operating profit = gross profit – total operating expenses Net profit = operating profit – taxes – interest Net profit = net sales – cost of goods sold – operating expense – taxes – interest
2. Another equation to calculate net income: Net sales = gross sales – (customer discounts + returns + allowances) Gross profit = net sales – cost of goods sold Gross profit percentage = [(net sales – cost of goods sold)/net sales] × 100%. Operating profit = gross profit – total operating expenses Net income = operating profit – taxes – interest
3. Another equation to calculate net income: Net sales (revenue) - Cost of goods sold = Gross profit - SG&A expenses (combined costs of operating the company) - Research and development (R&D) = Earnings before interest, taxes, depreciation and amortization (EBITDA) - Depreciation and amortization = Earnings before interest and taxes (EBIT) - Interest expense (cost of borrowing money) = Earnings before taxes (EBT) - Tax expense = Net income (EAT)
4. Here is how you reach net profit on a P&L (Profit & Loss) account: Sales revenue = price (of product) × quantity sold Gross profit = sales revenue − cost of sales and other direct costs Operating profit = gross profit − overheads and other indirect costs EBIT (earnings before interest and taxes) = operating profit + non-operating income Pretax profit (EBT, earnings before taxes) = operating profit − one off items and redundancy payments, staff restructuring − interest payable Net profit = Pre-tax profit − tax Retained earnings = Profit after tax − dividends

\$\$Sales Revenue = (Price Of Product) - (Quantity Sold)\$\$

\$\$Gross Profit = (Sales Revenue) - (Cost)\$\$

\$\$Operating Profit = (Gross Profit) - (Overhead)\$\$

Earnings Before Interest and Taxes (EBIT) \$\$EBIT = (Operating Profit) + (Non-Operating Income)\$\$ Earnings Before Taxes (EBT) \$\$EBT = (Operating Profit) - (One Off Items, Redundancy Payments, Staff Restructuring) - (Interest Payable\$\$

\$\$Net Profit = (EBT) - (Tax)\$\$

\$\$ Retained Earnings = (Net Profit) - (Dividends)\$\$

5. Net profit is a measure of the fundamental profitability of the venture. "It is the revenues of the activity less the costs of the activity. The main complication is . . . when needs to be allocated" across ventures. "Almost by definition, overheads are costs that cannot be directly tied to any specific" project, product, or division

Revenue - Cost

6. Net profit: To calculate net profit for a venture (such as a company, division, or project), subtract all costs, including a fair share of total corporate overheads, from the gross revenues or turnover. Net profit = sales revenue − total costs