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Wednesday, October 13, 2010

Sales Effectiveness,P&L Metrics List - 1


1. 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. = Sales revenue ($) - Total costs ($)

2. Net Profit Margin = The net profit margin formula looks at how much of a company's revenues are kept as net income. The net profit margin is generally expressed as a percentage. Both net income and revenues can be found on a company's income statement. (Total Revenue – Total Expenses)/Total Revenue = Net Profit/Total Revenue

3. Gross Profit Margin = Gross profit margin is a profitability ratio that measures how much of every dollar of revenues is left over after paying cost of goods sold (COGS). Gross profit margin is calculated by subtracting cost of goods sold (COGS) from total revenue and dividing that number by total revenue. Gross profit margin = (Revenue - cost of goods sold (COGS))/Revenue

4. Operating Profit Margin = The operating profit margin gives the business owner a lot of important information about the firm's profitability, particularly with regard to cost control. It shows how much cash is thrown off after most of the expenses are met. A high operating profit margin means that the company has good cost control and/or that sales are increasing faster than costs, Operating Profit Margin = Operating Income/Sales Revenue    

5. Revenue Growth Rate = Revenue growth illustrates sales increases/decreases over time. It is used to measure how fast Sales are expanding. More valuable than a snapshot of revenue, revenue growth helps analysts identify trends in order to gauge revenue growth over time.Revenue Growth = (Revenue this year / Revenue last year) - 1

If you want some perspective on how you or your company needs to enhance their Sales/Client Management Capabilities, please email me at shubhanjan.saha@gmail.com

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