Total profit, also called gross profit, is calculated by taking the total received from sales and subtracting the cost of the goods sold. It does not include expenditures, such as insurance and taxes. Gross profit is used to calculate the gross profit margin.
Know MoreThis is all the money the business made by selling products and services. Take all the money received by customers, and add it up. If a company sells Item A for $10, Item B for $5 and Item C for $15, the total revenue is $35.
The cost includes items that were directly involved in the production of the item, such as materials, shipping costs and merchant fees. It does not include overhead items, such as office supplies, administrative costs, legal fees or rent payments. If Item A costs the company $5 to make, sell and ship, Item B costs $2 and Item C costs $10, then the cost of the total goods is $17.
The difference is the company's total profit. In the example, $35 minus $17 is $18, so $18 is the total profit. This number is then used to calculate the gross profit margin, a measurement of operating efficiency, by taking the gross profit and dividing it by the total revenue. For example, it is $18 divided by $35 for a profit margin of 51 percent.
The reserve ratio is calculated by finding the ratio between the amount of funds held by a financial institution and the total amount of liabilities carried by the institution, according to the Board of Governors of the Federal Reserve System. The ratio can be found by dividing the numbers.
Full Answer >A railroad retirement annuity is calculated through formulas for two tiers of benefits and the vested dual payment, according to the U.S. Railroad Retirement Board. Spousal and survivor annuities are calculated separately.
Full Answer >The cost of goods purchased is calculated by subtracting the cost of goods sold from the cost of sales. Figuring out the cost of goods purchased is valuable for many businesses because it reflects whether or not a business has spent too much money on inventory. In addition, the cost of goods purchased is a useful tool for determining how much product needs to be sold to make a profit.
Full Answer >Determine your lifestyle needs to find out how much money to save for retirement and when retirement is possible, recommends Mitch Strohm for Bankrate. Consider how much savings is needed, at what age you plan to retire and what proportion of income you plan to use each year of retirement.
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