GROSS PROFIT MARGIN: a Simple Explanation

[@AccountingStuff]

Hey there! which Financial Ratios would you like me to cover next? ⏱️TIMESTAMPS 00:00 - Intro 00:13 - Gross Profit Margin Definition 01:02 - What is Profit? 01:22 - What is Profit Margin? 02:26 - What is Gross Profit? 03:13 - What is Gross Profit Margin? 04:00 - Example: Gross Profit Margin 04:45 - Comparison: Year on Year 05:30 - Comparison: Different Businesses 06:26 - What Decreases Gross Profit Margin? 07:03 - What Increases Gross Profit Margin?

[@vamp9750]

I don't know how youtube work a channel with bad content get like a 10000000 like and a channel like your with a wonderful content and great presentation don't man this is crazy

[@tomstanely]

How to maintain a Fixed Asset Register ! :)

[@AccountingStuff]

@@tomstanely Thanks for your request!

[@AccountingStuff]

@@vamp9750 Cheers for your kind words :)

[@happinesstshepiso9258]

The Reason is that People have attitude towards accounting. They don't Like it and they don't want to learn it. Forgetting that every money decision, it boils down to Accounting. That's why most of us don't have financial Literacy and end up making a lot of money mistakes and poor investment decisions.

[@celestialcelesta3917]

Thank you so much, James!! Glad you're back 😀

[@AccountingStuff]

No problem :)

[@cakeburgers9823]

Thank you so much for your videos. I am a new business owner with zero accounting experience. Watching your videos has helped me to understand how to understand the different financial statements. I never get bored watching your videos and I watch them over and over again. You are super easy to watch and understand 🌟🌟🌟🌟🌟for you! Thank you James. - Evette

[@AccountingStuff]

Hey Evette, I'm glad to hear that you're finding these helpful. Hope your studies are going well. All the best :)

[@CKBREEZY7]

Your shows are the best on KZbin. Well explained.

[@gabrielbonifacio]

This has been very helpful to me especially when I review pnl when I was the store manager of a restaurant.

[@Art_by_Zakiya]

I'm doing the CIA now and there are so many accounting terminologies which I don't understand. But now I do, thanks to you. Really really helpful

[@AccountingStuff]

Yes there are so many terms and acronyms to remember! Glad it's clicking for you

[@turningwest]

Thanks!

[@AccountingStuff]

Many thanks!!!

[@daniellevaneeden7777]

I just had a bit of a nostalgic moment when i saw the upload notification. Sadly, our journey has come to an end as i dropped accounting 2 months ago after my mock exams. Thanks for all the help over the years💞🌟🌻

[@AccountingStuff]

No problem Danielle, sorry to hear it didn't work out. Wishing you all the best!!

[@dijindas1162]

Great work bro. The video is very useful, crisp and clear.

[@Daniel-oj2xe]

You are my only utuber that i hit your notifications bell. Always waiting your amazing vd 😍

[@AccountingStuff]

Thank you! Hope you find this one helpful :)

[@tomstanely]

Another great video by the best KZbin channel on common accounting concepts :) Sometimes I learn more about concepts I think I already know when I watch your videos.

[@samm5205]

Always waiting for you to upload James!

[@AccountingStuff]

Sorry it takes so long!

[@samm5205]

Still worth the wait❤️ No pressure just go with your pace James👍

[@MandeepKaur-is1nb]

Please make Next Video on the topics - Solvency ratio Liquidity ratio Activity ratio Profitability ratio. And please ans my ques that why spare tools or loose tools are not considered part of current assets?

[@AccountingStuff]

Thanks for your requests!

[@naveenkumarsharma9445]

Wait is over :) Bro is Back

[@AccountingStuff]

Cheers Naveen! It's good to be back :)

[@Middlenamejane]

Just in time! GPM, OPM, and NPN hadn't been apart of your channel last time I was here. I can't tell you how happy I am that I double checked :D :') :') :')

[@AccountingStuff]

Hope it helps :)

[@sarahidehenre7546]

Found this piece very helpful. Thanks a bunch

[@AccountingStuff]

No worries, glad to hear it :)

[@hrishikeshbadiyar4662]

Hey, just a humble suggestion I think it would be awesome it you also made some economics video

[@AccountingStuff]

Thanks for your request! It may be a possibility in the future

[@TheGippy30]

Nice to have you back James

[@AccountingStuff]

Thanks buddy, it's been too long!

[@aggieterry8301]

Looks who's back 😊👍

[@jessabelle.]

Thanks for making these video so much clearer and better to understand and remember the content! ;)

[@AccountingStuff]

You're most welcome :)

[@Mykhailo_Vasylenko]

Wow man I didn’t know an Accountancy can be so interesting

[@DreamFirms]

Another helpful content from your channel!

[@191125]

I'm so glad you decided to cover ratio analysis!

[@AccountingStuff]

I've been meaning to do it for ages! Lot's to cover here

[@edenjaftha6752]

Awesome video!I wanted to know if you could perhaps do one video of the going concern concept,I am having some difficulties trying to understand it. Thanks in advance 💪

[@tanmay8088]

Yes you're back !! 😀 Please make videos on earnings ratios.

[@AccountingStuff]

Will do :)

[@anjoedaviscatholic9143]

Nicely done!

[@AccountingStuff]

Thanks!

[@futureself401]

Man this stuff is helpful as someone who is majoring in accounting I really appreciate it as well as many other students from an actual person who worked in the finance industry!

[@AccountingStuff]

Glad you're finding it helpful. Plenty more to come :)

[@ellenoir5678]

Yes a new video 😁

[@mohsinbaig2195]

Watched done 🙌🏼. You brief it excellently 💕

[@tytrrtt]

Thanks for the video !

[@AccountingStuff]

No worries :)

[@giovannagehring]

Thanks a lot! I am loving your videos.

[@gustavobrito-i9s]

Voce é o cara!! Muito obrigado!

[@AccountingStuff]

De nada :)

[@Mkba7003]

Hello, please can you explain what you mean with “sales mix” and “FX rate”?? Thank you

[@AccountingStuff]

Sales Mix: The proportion of different products or services a company sells. This affects the overall Gross Profit Margin based on the profitability of each item. FX Rate (Foreign Exchange Rate): The rate at which one currency can be exchanged for another. This impacts Gross Profit Margin when sales or costs involve multiple currencies due to fluctuations in exchange rates.

[@kaydence169]

I guess I'm confused on what makes a good gross profit margin for an online retail small business. What do you consider a "good" gross profit margin?

[@nafiskhan8801]

Love from Bangladesh 🇧🇩❤💕

[@AccountingStuff]

Love from Canada 🇨🇦

[@rickastell7213]

Thank you man.

[@YonePepe]

I'm confused. So sales tax is not included in COGS? For example, if I sell a product for $100 and the sales tax is $5, it's not accounted in the COGS?

[@AccountingStuff]

Sales tax is a tax collected by a business on behalf of the government when a sale is made. If a business sells a product for $105 (with sales tax included), the Journal Entry would be debit Cash $105 (to increase Assets), and credit Revenue $100 & credit Sales Tax Payable $5 (to increase liabilities)

[@vamp9750]

thanks my man sooooooooo much

[@AccountingStuff]

No problem :)

[@jasminlynettgarcia8057]

The financial statement i have to review for class is in Yen. does the formula work the same?

[@AccountingStuff]

The formula works in any currency

[@yinyin7614]

Great video. Recommended.

[@AccountingStuff]

Thanks!

[@FRANKWHITE1996]

Long time no see my friend 🎖

[@AccountingStuff]

It's been far too long!

[@Lissenen]

THANK YOU SO VERY MUCH!!!!

[@KumR]

We also have ROI as "Revenue - Cost / Cost". A video on that may help too.

[@rajeshk4502]

hello why do we divide by revnue y not by cogs, we earned on 500 exact same amont tat is 500.. now that is 100 percent. but GPM is only 50 percent as revenue was 1000. shouldnt we divide by 500 itself... as it 100 percent not 50 percent logically. kinldy help me understand thanks

[@nepaluptv1]

FEL Corporation spent $1,000 on the cost of goods sold during a fiscal period. They also paid $300 in marketing and advertising fees, $15 on interest fees related to loans and $1,000 in administrative fees and wages. FEL Corporation earned a total of $4,000 for the same period of time through sales.Find gross profit.

[@avanadham338]

Dear James many thanks for the efforts you make putting these useful videos , i am from iraq and i want to buy the cheat sheets but i cant find iraq which i am from inthe billing list can you help please??

[@princessgucci1575]

Thank you, would you please make videos about OFFSET Accounting? 🥰

[@AccountingStuff]

Thanks for your request!

[@DungPham-st6fn]

Thank you so much for making videos, could you please do some videos relating to funding count?

[@AccountingStuff]

Thanks for your request!

[@blackm9063]

Great 👍

[@scottholden5067]

These videos are great!

[@AccountingStuff]

Cheers Scott :)

[@TheLordismyshepherd...]

Awesome. Can you please teach us how to tally?

[@AccountingStuff]

Thanks for your request!

[@steelman034]

Hey James I’ve been watching your videos lot and they’ve help me understand lots of accounting concepts. I greatly appreciate your effort. You would mind doing a video on The allowance method and direct write off method for receivable. It would be very helpful.

[@AccountingStuff]

Thanks for your requests!

[@kaarthiraghavshivaganesh1567]

What is amortization?

[@seancarnell1503]

Google defines it as the whittling down of an asset overtime. I think he groupped it depreciation here since they are sort of related. Where depreciation applies to a fixed asset (your car isn't worth as much today as it is tomorrow), amortization is generally closer related to non tangible assets. First example that comes to mind is $24000 of prepaid rent for 12 months (a short term assest), each month you'd amortize $2000 to counter the monthly rent expense. I have medium confidence in this answer.

[@AccountingStuff]

Depreciation and Amortisation both write down Long Term Assets over time (transferring the cost from Assets in the Balance Sheet to Expenses in the Income Statement). The key difference is that we depreciate Tangible Assets (stuff you can touch) and amortise Intangible Assets (stuff that you can't touch). As you can see, the two are very similar.

[@kaarthiraghavshivaganesh1567]

@@AccountingStuff Thank you James for the explanation

[@AccountingStuff]

@@kaarthiraghavshivaganesh1567 No worries :)

[@happinesstshepiso9258]

Can you make a Video on *Financial Group Statements* of a *Parent company* and a Subsidiary company. Just a Basic Theory.

[@AccountingStuff]

Thanks for your requests!

[@АмбарАбрамовицй]

Thank youuuu

[@AccountingStuff]

No worries :)

[@myhomie7691]

Can you make a video in how you joined the big 4 And can we do it or what

[@AccountingStuff]

Thanks for your request :)

[@larahporter8123]

MAD vs INLET?! My! For someone that works in a high tech manufacturing company is quite funny!

[@otuefiom5730]

Earnings per share ...it's great to have you back mate.. I miss you so much

[@AccountingStuff]

It's on my list!

[@riyaz8814]

Wow! Finally youu are back after a long time.

[@AccountingStuff]

It's been too long

[@tomrulz444]

Do 704(c)

[@AccountingStuff]

Thanks for your request!

[@estershimwafeni9083]

Petty cash book and cash book grade 9 please 🙏🏼 😢

[@AccountingStuff]

Thanks for your requests!

[@Iggyedits]

I like your vids, i am sure i will be using them when i pursue my MBA next year haha

[@AccountingStuff]

Cheers Alex! Good on you for doing the MBA

[@Iggyedits]

@@AccountingStuff Thats the plan anyways, Just need to get accepted into schools now haha

[@AccountingStuff]

@@Iggyedits Best of luck 🤞

[@KumR]

Nice. Some also call this as "Contribution Margin"

[@mohamedeassa]

Man I miss your videos

[@AccountingStuff]

Cheers Mohamed, hope all's good with you :)

[@mohamedeassa]

@@AccountingStuff Just finished university and I'm studying for the CMA exam

[@AccountingStuff]

@@mohamedeassa Congrats on finishing Uni!! Best of luck with your studies :)

[@tomstanely]

I believe you'll be able to explain this one topic that people find it very hard to understand: Deferred Tax I'm very curious as to how you would explain how deferred tax works. It's a difficult concept to grasp. The topic might be a bit too much for the channel as of now though, since you're covering mostly the basics.

[@abdul4515]

why would it be deferred? Just pay your taxes on time lol.

[@AccountingStuff]

I'll keep it in mind!

[@ulitalamontagne315]

If you could do videos on all ratios in the financial and management Accounting.

[@AccountingStuff]

This is the plan :)

[@tomstanely]

@@AccountingStuff Awesome plan :D

[@sebastianmorales2856]

Mad I thought you meant the carts

[@mohammedwaheeduddinafsar9482]

Nafa dene Wala nuksan bhi karane Wala Abhi humko Hukum hai profit and loss ka business karne ka agar profit ka hi ham karenge vah hamare liye haram hai businessman nafa nuksan hona jaruri hai vahi halal hai humne hamesha Lal Ishq ke liye La ilaha Mohammed Rasool Allah

[@Rahaneel1]

ah yes mad gpu best of the best and inlet cpu

[@edenjaftha6752]

Awesome video!I wanted to know if you could perhaps do one video of the going concern concept,I am having some difficulties trying to understand it. Thanks in advance 💪

[@AccountingStuff]

Thanks for your request!