Basic business math
In order to understand how well your business is doing there are some key terminology and math that you will need to understand, we look at the most common below;
Revenue - Payments received by businesses from selling goods and services.
Gross Profit - Revenue minus the direct costs of the goods and services.
Pre-Tax Net Profit - Gross profit minus all other costs except tax.
Post-Tax Net Profit - Pre-tax Net Profit - Tax
Retained Earning - Post-tax Net Profit - Dividends
Gross Profit Margin - A measure of profitability of a product, comparing Gross Profit to Revenue as a percentage. Its calculated as (Gross Profit/Revenue) x 100
Net Profit Margin - A measure of profitability, comparing Revenue to Post-Tax Net Profit as a percentage. Its calculated as (Post-Tax Net Profit/Revenue) x 100
