Misplaced Pages

#958041

16-399: Bottom line is the income that a company has after subtracting costs and expenses from the total revenue. When a lot of potential working capital is trapped in disputes, your company will be at risk of a decreasing bottom line. Bottom line or the bottom line may also refer to: Bottom line It is computed as the residual of all revenues and gains less all expenses and losses for

32-423: A dividend or held by the firm as an addition to retained earnings . As profit and earnings are used synonymously for income (also depending on UK and US usage), net earnings and net profit are commonly found as synonyms for net income. Often, the term income is substituted for net income, yet this is not preferred due to the possible ambiguity. Net income is informally called the bottom line because it

48-402: A company for selling its products or rendering its services. Also referred to as revenue , they are reported directly on the income statement as Sales or Net sales . In financial ratios that use income statement sales values, "sales" refers to net sales, not gross sales . Sales are the unique transactions that occur in professional selling or during marketing initiatives. Revenue

64-459: A net income calculation: Net Income = Gross Profit − Operating Expenses − Other Business Expenses − Taxes − Interest on Debt + Other Income {\displaystyle {\text{Net Income}}={\text{Gross Profit}}-{\text{Operating Expenses}}-{\text{Other Business Expenses}}-{\text{Taxes}}-{\text{Interest on Debt}}+{\text{Other Income}}} Net profit

80-424: A percentage. 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. Net Profit = Sales Revenue − Total Costs {\displaystyle {\text{Net Profit}}={\text{Sales Revenue}}-{\text{Total Costs}}} A detailed example of

96-478: A time period. Net sales are gross sales minus sales returns, sales allowances, and sales discounts. Gross sales do not normally appear on an income statement . The sales figures reported on an income statement are net sales. input vat - output vat sales of portfolio items and capital gains taxes Sales Returns and Allowances and Sales Discounts are contra-revenue accounts. In a survey of nearly 200 senior marketing managers, 70 percent responded that they found

112-401: Is a measure of the fundamental profitability of the venture. "It is the revenues of the activity less the costs of the activity. The main complication is . . . when needs to be allocated" across ventures. "Almost by definition, overheads are costs that cannot be directly tied to any specific" project, product, or division. "The classic example would be the cost of headquarters staff." "Although it

128-479: Is a transfer of property for money or credit. In double-entry bookkeeping , a sale of merchandise is recorded in the general journal as a debit to cash or accounts receivable and a credit to the sales account. The amount recorded is the actual monetary value of the transaction, not the list price of the merchandise. A discount from list price might be noted if it applies to the sale. Fees for services are recorded separately from sales of merchandise, but

144-406: Is earned when goods are delivered or services are rendered. The term sales in a marketing , advertising or a general business context often refers to a free in which a buyer has agreed to purchase some products at a set time in the future. From an accounting standpoint, sales do not occur until the product is delivered. "Outstanding orders" refers to sales orders that have not been filled. A sale

160-519: Is theoretically possible to calculate profits for any sub-(venture), such as a product or region, often the calculations are rendered suspect by the need to allocate overhead costs." Because overhead costs generally do not come in neat packages, their allocation across ventures is not an exact science. Net profit on a P & L (profit and loss) account: Another equation to calculate net income: Net sales (revenue) - Cost of goods sold = Gross profit - SG&A expenses (combined costs of operating

176-431: Is typically found on the last line of a company's income statement (a related term is top line , meaning revenue , which forms the first line of the account statement). In simplistic terms, net profit is the money left over after paying all the expenses of an endeavor. In practice this can get very complex in large organizations. The bookkeeper or accountant must itemise and allocate revenues and expenses properly to

SECTION 10

#1732765458959

192-477: The cost of goods sold , sales discounts, and sales returns and allowances. For a product company, advertising , manufacturing , & design and development costs are included. Net income can also be calculated by adding a company's operating income to non-operating income and then subtracting off taxes. The net profit margin percentage is a related ratio. This figure is calculated by dividing net profit by revenue or turnover, and it represents profitability, as

208-411: The bookkeeping transactions for recording "sales" of services are similar to those for recording sales of tangible goods. Net sales = Gross sales − (Customer discounts, returns, allowances) {\displaystyle {\text{Net sales}}={\text{Gross sales}}-{\text{(Customer discounts, returns, allowances)}}} Gross sales are the sum of all sales during

224-451: The company) - Research and development (R&D) = Earnings before interest, taxes, depreciation and amortization (EBITDA) - Depreciation and amortization = Earnings before interest and taxes (EBIT) - Interest expense (cost of borrowing money) = Earnings before taxes (EBT) - Tax expense = Net income (EAT) Net sales In bookkeeping , accounting , and financial accounting , net sales are operating revenues earned by

240-438: The period, and has also been defined as the net increase in shareholders' equity that results from a company's operations. It is different from gross income , which only deducts the cost of goods sold from revenue. For households and individuals, net income refers to the (gross) income minus taxes and other deductions (e.g. mandatory pension contributions). Net income can be distributed among holders of common stock as

256-409: The specific working scope and context in which the term is applied. Net income is usually calculated per annum, for each fiscal year . The items deducted will typically include tax expense , financing expense ( interest expense ), and minority interest. Likewise, preferred stock dividends will be subtracted too, though they are not an expense. For a merchandising company, subtracted costs may be

#958041