Profit Margin, Gross Margin, and Operating Margin - With Income Statements

[@TheOrganicChemistryTutor]

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[@ambersellers8024]

Thank you so much! I was having such a hard time understanding how profit margin works. You made it so much simpler for me. Thank you!

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man, this is so helpful. There are so many alternate words. Please use them as well to get it quick. Awesome work! Easy as hell step by step and good to revise! Thanks a lot!

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Thanks for refreshing my knowledge 💡

[@a7xfanben]

Thanks for the simple explanations!

[@maxwellvavana5066]

Very easy to follow, great explanation. Thanks

[@gregwright4860]

What is the difference between the operating expenses and the total expenses? In the example in this video there are $600M in Operating Expenses, and $640M in total expenses. What kinds of expenses could account for the additional $40M? Is it labor, administrative, depreciation....?

[@ssalazar817]

Thank you!! Great example.

[@XYZarifox]

I love how you can hear the resent in his voice - income tax...thats negative...that's an expense

[@yasminniroumand1321]

This was extremely helpful! thank you for your elaborate explanation.

[@ismailhussain915]

Hello

[@chris-g8o7t]

Gross,Operating,Net (profit aka income aka earnings) Gross Profit = Revenue - COGS. Operating Profit = Revenue - Total Operating Expenses. Net profit = Revenue - Total Expenses. Margin means divide by Sales aka Revenue and times by 100.

[@oiboy626]

Thank you so much for sharing and explaining this information!

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Good video👍

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[@noulafrantz8589]

Now I understand what's a profit margin

[@citizencoy4393]

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[@donaldbernard4227]

Excellent

[@behrazasgharzadeh9844]

Thank you for the clear explanation

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[@werfghn]

Yes! Thank you brother!

[@oni5909]

How the hell did you get so smart man you deserve all the views

[@lifebyjenny]

For operation income I think u for got to subtract cost of goods sold

[@BillyGILN]

Thank you for the video, I'm just confused as to where you have to move the decimal point two spaces to the right for 37.5%, when I calculated 300M/800M=0.375?

[@mr.d1571]

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[@jmck9588]

It's the profit margin that determines how strict management needs to get and be.

[@mist9965]

10:33 if cost of goods sold is an expense. How can total expense be 640M (500M + 600M)?

[@divyasampath9500]

Thank you 😊

[@kevinsu9347]

sorry I have a question about question one, if the COGS is 500M and operating expenses are 600M, why total expenses are 640M instead of 500m+600m? Thank you

[@chris-g8o7t]

In that example, The COGS was 78.1% responsible for the Total Operating Expenses. As a food analogy, if Total Operating Expense was a pizza, COGS would be the Pepperoni and be on essentially 75% of the pizza.

[@silshee_254]

XYZ business has a rate of turnover of 7 times. Average stock is $12,600. Trade discount (i.e. margin allowed) is 33.25 % off all selling prices. Expenses are 66.75% of gross profit. Calculate the following: a. cost of goods sold b. gross profit margin c. turnover d. total expenses e. net profit

[@SQL-gf2rb]

Thanks a lot.

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wowww,i just realized you are Bucky Robertson,the guy who taught about physics on the other channel

[@Questary]

This was helpful but school still sucks

[@themoon3463]

Good job

[@yxngcas9875]

So when you say "sales" that's overall total, right? (Including the expenses etc...) or just the profit?

[@adrianaencisojure9582]

Sale are revenues. Basically is the price of what you are selling x quantity. You dont have to discount expenses

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What is the software you are using to draw the numbers?

[@j.stan-e7869]

Thank you so much. Subs

[@aidengu3161]

@4:54 the math here is off, 30%=0.30 so you can't divide it by 100, that will make it 0.003. The NI is 30% by your equation which will end up being $0.3M.

[@randomjose]

Thanks I was confused for a long time, thinking that if your cost of one item is $1 and sell it for $2 my margin was 100%.... lol

[@royrockerfeller]

Exactly. Millions of people still use this.

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Hey man keep up🤙

[@yvonneblache1515]

Hi I need to know if 500000 in revenue 145000 in net income, balance sheet showed net asset 350000, what is the operating ratio and

[@davidlora7536]

Is COGS part of operating expenses or not? 🤔 edit: if it Is not, then total business expenses = 500 + 600 = 1100 ?

[@chris-g8o7t]

In that example, The COGS was 78.1% responsible for the Total Operating Expenses. As a food analogy, if Total Operating Expense was a pizza, COGS would be the Pepperoni and be on essentially 75% of the pizza.

[@Corum-x3s]

Box Office of this movie had to of been $950,000,000,000,000

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[@tanquemoran]

Hi, if i have a GM of 55% Sales for 30,000 Units and unit price is $100. I have an opportunity to sell 10,000 units at $71 (only in this 10,000 units) What is the GM per unit and GM for promotional Opportunity?

[@LinaSemak]

Question. How did total expenses end up being $640M? Don't you just add COGS and EBIT?

[@Leon_reads]

Best teacher in the world! There’s one equation that won’t stop bugging me: Calculating Sales Price. If I bought a car for $1000 and I wanted to resell it to make a 30% margin. My intuition says that the price I should sell it for (to make 30% margin) should be $1,300. But in this pricing equation: Price = Costs/(1- % margin) Price = $1000/(1- 30%) Price = $1000/(1-0.30) Price = $1000/ (0.70) Price = $1, 428.00 (the real price I should sell the car to make a 30% margin!) Confirmation: 1,428 - 1,000/1,428 = 30% margin! Could anyone help me learn how to think about this calculation? Especially why the (1-% margin)? Why does the denominator need to be .70? Where am I wrong?

[@Leon_reads]

I no longer want to use formulas without understanding the why’s.

[@marcussatterwhite]

100% means Gross total sales correct?

[@abhaychowdhary746]

Thanked

[@tannarframpton9454]

I would be tickled if my business could hit 40%+ profit margins. :)

[@tenebrae1191]

👏👏

[@francescotagliavento8081]

what is the gross profit if the elements of the income statemnt look as follows: secondary income 33,000; COGS 68.000; depreciation 500; sales 100,000? a)32,000 b) 20,000 c)32,500 d)25,000 e) none of above answers is correct Someone could help me? I don't know how to calculate that?

[@RevansNightmare]

Anyone else having trouble with the formulas when using it on a 10K form? I am not following and have always had good grades in math.

[@Sk8terboy31rs]

Interesting

[@dziugas6795]

i dont understand why it is using sales not revenue. He mentioned that sales are same as revenue but its not actually quite the case can someone explain me?

[@MsSammieSam]

sales and revenue can be the same for some businesses. For example, if your business was selling candles and you recognized revenue based on the candles you sold, it would be the same. You sold 100 candles at $5 each would result in both your sales and revenue being $500. However, in a consulting business, sales and revenue typically differ. Sales is the dollar amount of the contract you obtained but revenue is the value of the work you have performed so far. You finalized a contract for services for $10,000 so $10,000 is your sales for the month. However, if you only performed/billed 30% of that contract then revenue would only be for $3,000 and not the full amount of the contract. This example assumes the first scenario.

[@MrPabloguida]

You should say multiplied by 100 and not multipled by 100%. These are two different things. Very good video though.

[@ineedstuff8286]

100%. ;)... sooooo many people didn’t get that... oh well, still good content ASIDE from simple math

[@brailyramos6892]

But something that i still don't understand is the differences of a gross margin and gross profit margin. Let's say it like this (Gross Margin and Profit Margin vs Gross Profit Margin).

[@muizudeen.oladimeji]

Gross margin is the same as Gross profit margin

[@chris-g8o7t]

Gross,Operating,Net (profit aka income aka earnings) Gross Profit = Revenue - COGS. Operating Profit = Revenue - Total Operating Expenses. Net profit = Revenue - Total Expenses. Margin means divide by Sales aka Revenue and times by 100.

[@satyamace]

800M worth of sales with 500M+600M+640M of spends still net profit margin of 20%. What's the magic?

[@tyandai]

Chris Boles ?

[@dhualshammaa2062]

Why the operation profit like this ? it should be ((Gross profit - operation cost ) / sales ) * 100%

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[@tyrellaxe8841]

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[@abdolzamil9061]

i still dont understand the different between gross margin and profit margin

[@jkj1459]

GM UNDERSTOOD , PART B OM NOT UNDERSTOOD , BECAUSE WE DID NOT CONSIDER COST OF GOODS 500MN , BUT CONSIDERED 600MN AS OE NOW COST OF GOODS ESCAPED , SO THIS IS NOT CLEAR SIR . I AM SORRY .

[@mattgargiulo3995]

please correct me if I am wrong but I think Operating Income should be sales - COGS - Operating Expenses. Therefore 800 - 500 - 600 => operating inncome of -300. You'd then divide this by your sales to get your operating margin.

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[@crypto5977]

Doesn't make sense at all.