There are so many aspects to running a small business, and it helps that some things can be automated or at least made easier with calculators. One example is a gross profit calculator, also known as a mark-up calculator.
Who should read the article?
This article informs traders, businessmen and readers who:
You want to understand how to calculate gross margin with or without a calculator
You want to use Excel to calculate gross profit margins
Don’t know why they need a gross profit calculator as a business owner or trader
What does the article describe?
The gist of the article revolves around the need for a business owner to understand whether his business is profitable or not. Income statements are usually in sterling, and it is difficult to tell from these figures alone whether the company is making any money or not. According to the article, calculating percentage values is much more useful for analyzing and understanding business performance.
The author then goes on to describe how to calculate gross profit margins. You can start by using a gross margin calculator to calculate the gross margin. For someone who is entirely new to business, the author helpfully suggests which expenses matter and which ones don’t.
The calculations are explained with the help of an illustration. The illustration also presents a scenario where understanding gross margin can help a business owner make a more informed decision about which business model to adopt for their retail store.
Use Excel to calculate profit margins
The author also describes how to use Excel spreadsheets to calculate gross profit margins. They walk the reader step by step through the process of entering net sales and cost of goods sold in their respective columns and using the profit margin formula.
The author offers some guidance on the necessity of using a GP calculator as a trader or business owner. The reasons include better management of profits for business growth, protection against market volatility, better decision making and better tracking of multi-product or multi-project companies.
The article ends with tips on how a business owner can determine where they stand with their profit margins in their particular industry.
The article Are you using a gross margin calculator to understand your margins? offers illustrations and formulas to help business owners determine their profit margins. The article will also help small business owners without an accountant feel confident enough to do the math to make better decisions about what changes to make to their business models or where to put their money.
Overall, the bottom line is that businesses need to be mindful of their profits and keep an eye out for different profit channels in order to plan their business. Customer reviews and market research are not as revealing as exact numbers and profit percentages.