Notes

How do you calculate gross wages?

Two critical profitability metrics for any company include gross profit and net income. Gross profit represents the income or profit remaining following the production costs have now been subtracted from revenue. Revenue is the quantity of income generated from the sale of a company's goods and services. Gross profit helps investors to determine just how much profit a company earns from the production and sale of its goods and services. Gross profit may also be known as gross income.

On the other hand, net income is the profit that remains after all expenses and costs have been subtracted from revenue. bruto netto loon berekenen Net income or net profit helps investors determine a company's overall profitability, which reflects on what effectively a company has been managed.

Understanding the differences between gross profit vs. net income will help investors determine whether an organization is earning a profit, and or even, where the company is losing money.

Gross Profit
Gross profit, operating profit, and net income refer to the earnings a company generates. However, each one of these represents profit at different phases of the production and earnings process.

Gross profit is just a company's profits earned after subtracting the costs of producing and selling its products—called the expense of goods sold (COGS). Gross profit provides insight into how efficient an organization is at managing its production costs, such as for instance labor and supplies, to produce income from the sale of its goods and services. The gross profit for a company is calculated by subtracting the price of goods sold for the accounting period from its total revenue.

Revenue
Revenue is the full total amount of cash earned from sales for a particular period, such as for example one quarter. Revenue may also be listed as net sales because it could include discounts and deductions from returned or damaged merchandise. For example, companies in the retail industry often report net sales as their revenue figure. The item that has been returned by their customers is subtracted from total revenue. Revenue is frequently called the "top line" number since it's situated at the the top of income statement.

Shipping costs
We could see from the COGS items listed above that gross profit mainly includes variable costs—or the expense that fluctuate depending on production output. Typically, gross profit doesn't include fixed costs, which are the expense incurred regardless of the production output. For instance, fixed costs might include salaries for the corporate office, rent, and insurance.

However, some companies might assign a portion of the fixed costs used in production and report it predicated on each unit produced—called absorption costing. As an example, let's say a manufacturing plant produced 5,000 automobiles in one quarter, and the organization paid $15,000 in rent for the building. Under absorption costing, $3 in costs could be assigned to each automobile produced.

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