This method is also called the profit margin ratio, the percentage of return on sales, the percentage of gross profit, and the percentage of profit is the percentage and it is determined after deduction and payment of all taxes and obligations arising from the company and classifies the percentage of profit from the best financial, economic and administrative measures on which the results of the enterprises depend and a percentage is calculated Profit by the following equation.
Profit = net profit ÷ net sales x 100%
The equation is that the percentage of profit equals the net profit, that is, the total value of profits after paying all obligations, including taxes, workers, rents, and the like, divided by the value of sales multiplied by 100%.
We will explain in detail what is meant by net profits and sales value (net sales:
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Earnings
To reach the net profit, you as an accountant must answer all these equations.
Purchases = Purchases – (Purchase Revenue + Earned Discount)
Procurement costs = net purchases – procurement expenses
Net sales = sales – sales returns – allowable discount
Sales = first-term goods + procurement costs – last-end goods
Profit = net sales – sales costs
Profit = (total profit + revenue) – banks, so you must answer all the equations in order to get to the net profit correctly.
Sales Value
It is the total of standard sales at the selling price, i.e. equal to the price multiplied by the sold quantity, and the scale is usually used as a means to determine the size of the market. As for small enterprises, the value of sales is the same as sales revenue and is used to find out the percentage of profits
To find the value of sales = gross profit + (first-period inventory + purchases – last period inventory.
For example, in finding the percentage of profits, the value of sales in a foodstuff company reached about $ 250,000, while the net profit value reached $ 150,000, so what is the value of the percentage of the profits for this company?
The following formula which is the ratio of profit = net profit ÷ net sales x 100%, 150,000 ÷ 250,000 = 0.6, (0.6 x 100) = 6% is the percentage of profit.
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