Before investing any stock shareholders or investors looks net profit percentage closely because it shows how superior company is performing and how much profit will investors or share hordes will get from total revenue. Relevance and Uses of Profit Percentage FormulaĬompanies followed profit percentage numbers closely and it is one of the most followed numbers in finance. Calculation of profits Percentage formula can be difficult in determining them and considering what is accurate for the business. An Increase in operating margin might reflect a higher gross profit margin and/or better control of operating costs. Operating profit percentage is the difference between sales revenues, cost of goods sold and other operating expenses divided by total sales.

Profit percentage formula is the percent of sales that’s available to cover their expenses and provide a profit. Profit percentage formula can tell us a lot about the economic nature of the company which we cannot get to know from gross profit. Profit percentage formula is nothing but the Companies Total revenues (Total Sales) minus its cost of revenues ( Cost of Goods sold or Cost of Sales) Divided by the Total revenues (Total Sales). Profit Percentage Formula – Example #3įrom the following income statem ent of Coca- Cola Company for the year ended Dec 2011 and Dec 2010 calculate the Gross Profit Percentage and Operating Profit Percentage for both the years. So Networking Inc getting 78.33% gross profit on bags, which tells networking Inc that 78.33% of its net sales will become gross profit and for every dollar of sales networking Inc generates, they earn 78.33% in profit before expenses are paid. Gross Profit Percentage = ((Total Sale – Cost of Goods Sold) / Total sales) * 100 Gross Profit Percentage is calculated using the formula given below So Networking Inc has a Gross profit of $23,50,000, it means that goods which networking Inc Sold for $3,000,000 cost them $650,000 to produce and the company can utilize $23,50,000 to pay its other expenses. Gross Profit = Total Sales – Cost of Goods Sold Gross Profit is calculated using the formula given below

Networking Inc management has a forthcoming meeting with its investors, so management of Networking Inc is looking to find out gross profit and Gross profit percentage from the following Income statement of Networking Inc at the end of the year. Networking Inc is a Bag manufacturing company which manufactures all types of bags like travel bags, School bags, Laptop bags and so on and Network Inc established its business in the market successfully. Operating Profit Percentage = (Operating Profit / Total Sales) * 100

Operating Profit Percentage is calculated using the formula given below Operating Profit = Total Sales – Cost of Sales – Office and Administration Expenses – Selling and Distribution Expenses Operating Profit is calculated using the formula given below Net Profit Percentage = (Net Profit / Total Sales) * 100 Net Profit Percentage is calculated using the formula given below

Figuring percentages