Why Profit Is Different From Turnover

shopping-2163323__480
The major purpose of most businesses is to make a profit.

The amount of profit is represented by the increase in the net assets (total assets less total liabilities) of the business during the time the profit was earned. The aim is that those assets will eventually be converted to cash which will enable distributions to be paid to owners of the business.

The amount of profit which a business earns is also a major factor in establishing what the business is worth. This will be reflected in the selling price which can be achieved when the business is sold.

So the art of business is to do what it takes to generate profits.

In simple terms, profit equals sales less the cost of making those sales. These costs include the cost of raw materials, and direct and indirect expenses, including labour costs.

Turnover is naturally of prime importance, but they need to be profitable sales.

Some businesses like supermarkets, achieve their profits by very large turnover with relatively small margins ie there is not a lot of difference between sales of individual items and the costs of making those sales.

Other businesses, like speciality stores of services, make their profits on smaller turnover but with higher margins.

For most small to medium sized businesses, the margin is critical. If you give discounts to achieve greater sales, then this will erode your profit margin.

As an example:

Your normal selling price for an item is $100
You make a gross margin of 40%.
Your gross profit is normally $40 which goes towards paying overhead expenses and generating a net profit.
However to try and attract more sales, you decide to offer a discount of 20%.
Your gross profit is thereby reduced to $20 which is a 50% reduction to normal.

 

If you have different product or service lines, it is always worthwhile doing an analysis of the margin which each product range of service is achieving. We sometimes see, to the surprise of proprietors, that profits are being generated by one or two lines only, and these lines are supporting other lines which are not making a profit at all.

So discounts can sometimes be given for strategic purposes, but understand the effect they are having on profit. Generally it is much better to concentrate on providing great levels of service or quality, and marketing your “unique selling proposition” which is how marketers describe the particular feature of your business which your opposition doesn’t have (or doesn’t promote themselves as having).

By being effective in this, you will retain your margins, or even increase them by being able to raise your prices. You will look to increase your average sale per customer, and/or increase the number of times they buy from you. This way your sales will generate profits, and this is the goal.

Comments

Kurt Yoes

Saved as a favorite, I really like your blog!

Nike Outlet

bkooxksz,If you are going for best contents like I do, just go to see this web page daily because it offers quality contents, thanks!

Nike Air VaporMax Flyknit 2

myomfuirydz,Thanks for sharing such an amazing blog. I am so happy found this informative blog.

cheapjerseysfromchina

kdidrihjggh,Wonderful one thank you so much !

NFL Jerseys Outlet

ksmhdwkajak,Definitely believe that which you said. Your favourite justification appeared to be on the net the simplest thing to remember of.

ssnfukhe,Definitely believe that which you said. Your favourite justification appeared to be on the net the simplest thing to remember of.

Cheap Sports Jerseys

wkxbtp,If you are going for best contents like I do, just go to see this web page daily because it offers quality contents, thanks!

Nike Air Max 2019

beanmxcco,Definitely believe that which you said. Your favourite justification appeared to be on the net the simplest thing to remember of.

Cheap NFL Jerseys

rwrvst,This website truly has alll of the information and facts I wanted about this subject and didn?t know who to ask.

air jordan 33

lgdwbxiki,Wonderful one thank you so much !

minecraft

Heya just wanted to give you a quick heads up and let you know a few of the pictures aren’t loading correctly.
I’m not sure why but I think its a linking
issue. I’ve tried it in two different browsers and both show the same results.

minecraft

Does your site have a contact page? I’m having problems locating
it but, I’d like to shoot you an email. I’ve got some recommendations for your blog you might be interested in hearing.

Either way, great blog and I look forward to seeing it grow over time.

Yeezy Boost 350

xjlwoqxu,Waw! Its really great and wonderful ever i found. Thank you for sharing this info.

Yeezy

iuotluiiv,Waw! Its really great and wonderful ever i found. Thank you for sharing this info.

minecraft

My programmer is trying to persuade me to move to
.net from PHP. I have always disliked the idea because of the expenses.

But he’s tryiong none the less. I’ve been using Movable-type on a number of websites for about a year and am worried about switching
to another platform. I have heard very good things about blogengine.net.
Is there a way I can import all my wordpress posts into it?

Any help would be really appreciated!

Yeezy 500 Utility Black

nysqpqisdu,If you have any struggle to download KineMaster for PC just visit this site.

NFL Jerseys 2019

faalbda,Your blog was informative and valuable to me. Thanks for sharing.

Nike Outlet

slietip,A very good informative article. I’ve bookmarked your website and will be checking back in future!

Yeezy

gagupd,Hi there, just wanted to say, I liked this article. It was helpful. Keep on posting!

Pandora Bracelet

xsnunhr,Thanks for this useful information, Really amazing. Thanks again. I LOve your BloG

Yeezy

dihkkyqgdu New Yeezy,If you have any struggle to download KineMaster for PC just visit this site.

Yeezy

bmhppsewb,If you are going for best contents like I do, just go to see this web page daily because it offers quality contents, thanks!

custom nfl jerseys

Globally, Spotify is still far ahead of Apple. As of December last year, Spotify said that there are 207 million active users worldwide, of which 96 million are paid users, or subscribers during the trial period, and the remaining Spotify active users have chosen a free advertising version of the service.

Nike Outlet Store

“In my opinion, perhaps the market has always been correct, that is, the Fed will tighten policy before the end of this year.

minecraft

Good day! Do you know if they make any plugins to safeguard against hackers?
I’m kinda paranoid about losing everything I’ve worked hard
on. Any tips?

http://tinyurl.com/

Link exchange is nothing else except it is just placing the other
person’s webpage link on your page at proper place and other person will also do similar
for you.

Yeezy 350

Though its cannabis connections are not as overt as legendary releases like the Skunk Dunk, its green suede overlays may be a much subtler call to the rich tones of a freshly picked nug. Bright red swooshes catch the eye in its leash-akin webbing while the underlying hairy panels push its connection to man’s best friend in both a black, brown, and spotted variety. Bone shaped tags come attached along the rear tab to be stored in the accompanying doggie bags alongside the spare laces.

minecraft

Normally I do not learn article on blogs, however I would like to say that this
write-up very compelled me to take a look at and do
it! Your writing taste has been amazed me. Thanks, very nice
article.

Yeezy

Moscow, despite heavy sanctions and an economy that has certainly seen better days, keeps pumping out new combat systems one after another–items like new tanks, submarines, nuclear weapons platforms and more.

minecraft

Genuinely when someone doesn’t know afterward its up to other users that
they will help, so here it happens.

gamefly free trial

What i do not understood is in reality how you are not really much more neatly-appreciated than you may be right now.
You’re so intelligent. You know therefore considerably in terms of this matter, made me in my view believe
it from a lot of numerous angles. Its like women and
men aren’t involved except it is one thing to do with Woman gaga!
Your individual stuffs outstanding. All the time handle it up!

gamefly free trial

Hi! Would you mind if I share your blog with my facebook group?
There’s a lot of folks that I think would really appreciate your content.
Please let me know. Many thanks

gamefly free trial

With havin so much written content do you ever run into any
problems of plagorism or copyright violation?
My website has a lot of exclusive content I’ve either created myself or outsourced but it looks
like a lot of it is popping it up all over the internet without my permission. Do
you know any methods to help stop content from being stolen? I’d definitely appreciate it.

gamefly

Good post. I learn something totally new and challenging on sites I stumbleupon on a daily basis.

It’s always useful to read articles from other writers
and use something from their web sites.

gamefly

Keep on writing, great job!

pandora charms outlet

The president continued: When Bernie Sanders made certain statements the other day, I said, ‘Well, that’s the end of his campaign.’ Then, what happened is everybody agreed with him.

minecraft pc download

Greetings, I think your site could possibly be having internet browser compatibility issues.
When I look at your web site in Safari, it looks fine however,
if opening in Internet Explorer, it has some overlapping
issues. I merely wanted to provide you with a quick heads up!
Apart from that, fantastic website!

I have read so many content about the blogger lovers except this
post is in fact a good post, keep it up.

Howdy fantastic blog! Does running a blog similar to this require a great deal
of work? I have very little understanding of programming
however I was hoping to start my own blog soon. Anyways, should you have any recommendations or tips for new blog owners please
share. I know this is off topic but I simply needed to ask.
Cheers!

mainframes

This site really has all of the information I needed about this subject and didn’t know who to ask. share now – https://is.gd/OB5Qjh

g

It is the best time to make some plans for the future and it is time to
be happy. I’ve read this post and if I could I want
to suggest you some interesting things or tips.
Maybe you could write next articles referring to this article.
I desire to read even more things about it!

Greetings from Carolina! I’m bored to death at work so I decided to check out your website on my iphone during
lunch break. I really like the info you provide here and can’t wait to take a
look when I get home. I’m shocked at how fast
your blog loaded on my mobile .. I’m not even using WIFI, just 3G ..

Anyhow, fantastic site!

Every weekend i used to go to see this web site, because i want enjoyment,
for the reason that this this site conations in fact good funny stuff too.

Wonderful blog! I found it while browsing on Yahoo News.
Do you have any tips on how to get listed in Yahoo News?
I’ve been trying for a while but I never seem to get there!
Many thanks

You really make it seem so easy with your presentation however I find this matter to be actually
one thing that I believe I would never understand. It kind of feels too
complicated and extremely broad for me. I’m taking a look
ahead for your subsequent publish, I will try
to get the grasp of it!

Hello there, just became aware of your blog through Google, and
found that it’s really informative. I’m gonna watch out for brussels.
I will be grateful if you continue this in future. A lot of people will be benefited from your writing.
Cheers!

Fantastic post but I was wanting to know if you could write
a litte more on this topic? I’d be very grateful if you could elaborate a little bit more.

Many thanks!

Amazing blog! Do you have any tips and hints for aspiring writers?
I’m planning to start my own site soon but
I’m a little lost on everything. Would you recommend starting
with a free platform like WordPress or go for a paid option? There are so many options
out there that I’m completely confused .. Any tips?
Appreciate it!

Vilma Idriss

Very interesting information!Perfect just what I was looking for!

Sydney CBD events

I conceive other website owners should take this site as an example , very clean and fantastic user pleasant pattern.

Air Jordan 12 Gym Red

http://www.authenticnflcheapjerseys.us/ Cheap Nfl Jerseys Wholesale

There is definately a lot to learn about this issue.

I love all the points you have made.

Nike Outlet

http://www.nikeoutletonlineshopping.us/ Nike Outlet Store

gamefly free trial

I think the admin of this web page is in fact working hard for his web page, since here every stuff
is quality based stuff.

Air Jordan 12 Gym Red

dmgtdpjt,This website truly has alll of the information and facts I wanted about this subject and didn?t know who to ask.

Nike Shox Outlet

http://www.dallascowboysjerseyscheap.us/ Cowboys Jerseys Cheap

Kyler Murray went No. 1 overall to the Cardinals as expected. Nick Bosa and Quinnen Williams followed to the 49ers and Jets,Jordan respectively.

Its like you read my mind! You seem to know a lot about
this, like you wrote the book in it or something.
I think that you could do with some pics to drive the message home a
little bit, but other than that, this is excellent blog.
An excellent read. I will certainly be back.

tinyurl.com

Hello There. I found your blog using msn. This is an extremely well written article.

I’ll be sure to bookmark it and return to read more of
your useful information. Thanks for the post.
I will certainly comeback.

tinyurl.com

Heya excellent blog! Does running a blog like
this take a great deal of work? I have no knowledge of computer programming
however I had been hoping to start my own blog soon. Anyhow, if you have any ideas or tips for new blog owners please share.
I understand this is off subject but I just wanted to ask.
Thanks a lot!

fpbjxaznba,This website truly has alll of the information and facts I wanted about this subject and didn?t know who to ask.

tinyurl.com

This info is invaluable. Where can I find out more?

Jordan 11 Concord

http://www.pittsburghsteelers-jerseys.us/ Steelers Jerseys Cheap

http://tinyurl.com/

I read this piece of writing fully regarding the difference of most up-to-date and earlier technologies, it’s remarkable article.

tinyurl.com

I absolutely love your website.. Very nice colors & theme.

Did you make this site yourself? Please reply back as I’m wanting to create my own blog and would love to find out where you got this from or just what the theme is named.
Appreciate it!

tinyurl.com

Hello there! I know this is kinda off topic but I’d figured I’d ask.
Would you be interested in trading links or maybe guest authoring a blog
post or vice-versa? My website addresses a lot of the same topics as yours and I feel we
could greatly benefit from each other. If you might be interested feel free to shoot me an email.
I look forward to hearing from you! Superb blog by the way!

tinyurl.com

I was wondering if you ever thought of changing the page layout of your blog?
Its very well written; I love what youve got to say. But maybe you could a little more in the way of content so people could connect with it better.
Youve got an awful lot of text for only having 1 or 2 pictures.
Maybe you could space it out better?

tinyurl.com

Wow, incredible weblog format! How lengthy have you ever been running
a blog for? you make blogging look easy. The full glance of your web
site is fantastic, let alone the content!

Very good info. Lucky me I found your website by chance (stumbleupon).
I’ve book marked it for later!

Please let me know if you’re looking for a writer for your weblog.

You have some really good articles and I feel I would
be a good asset. If you ever want to take some of the load off,
I’d love to write some material for your blog in exchange for a link back to mine.
Please shoot me an e-mail if interested. Kudos!

quest bars cheap

Link exchange is nothing else however it is only placing the other person’s blog link on your page at
appropriate place and other person will also do similar in support of you.

quest bars cheap

Thanks in support of sharing such a pleasant opinion, piece of writing is good,
thats why i have read it completely

quest bars cheap

This web site certainly has all the information and facts I wanted about this subject and didn’t know who to ask.

quest bars

It’s really a nice and helpful piece of information. I am happy that you
shared this useful information with us. Please stay us up to date
like this. Thank you for sharing.

http://tinyurl.com/

It’s difficult to find knowledgeable people in this particular subject, but you seem like you know what you’re talking about!
Thanks

Post Your Comment