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# Profit & loss, sales and cost of goods sold

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Profit & loss, sales and cost of goods sold
by Dr. Vincent BE Sangalang y DB Samson

Published in: Economy & Finance
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### Profit & loss, sales and cost of goods sold

1. 1. Profit & Loss, Sales and Cost of goods sold © Prof. Vincent Sangalang. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. 2. Profit and Loss & Inventory  The ultimate goal of every business is to gain profit whether the business is conducted by a vendor selling apples or whether the business consist of a large conglomerate dealing with all kinds of goods, from cosmetics, to clothing, to canned goods and to machines and other types of human necessities.  Inventory means taking the value of stock of goods on hand. Inventory may be done monthly, quarterly, semi-annually or annually.
3. 3. Formulas:  Profit = Sales – Cost  Available goods for sale = Beginning Inventory + Total Purchases  Cost of Goods Sold = Total Available Goods for sale – Ending Inventory  Gross Profit = Total Sales – Cost of Goods Sold  Net Profit or Net sales = Gross Profit or Net sales – Operating Expenses
4. 4. Formulas Continuation…  Percent profit = Net Profit/Net Sales  Percent overhead (expenses) = Total expenses/Net Sales  Percent loss based on net sales = Net Loss/Net Sales  Percent loss based on cost and expenses = Net loss/Cost & Expenses.
5. 5. Important notes:  If the operating expenses is greater than the gross profit, there is a net loss instead of net profit. Although gross profit is never a loss because the store has to sell goods at a higher price than the amount it paid for the goods, the store may still incur a net loss.  The net profit is the true profit of the store after it deducts the expenses it incurred in selling the goods. © Prof. Vincent Sangalang. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.