_Example provided is for a F&B business._
Collections : What is collected from customer ...
= [ net sales ] + [ SST ]
*SALES*
Gross Sales : Big number that is rarely reported ... because it is ...
= [ net sales ] + [ sales discounts ] + [ sales allowances (price reductions due to defective goods) ] + [ sales returns ]
Net Sales : Actually useful ...
= [ gross profit ] + [ direct costs ]:
*DIRECT & INDIRECT COSTS*
These refer to the costs of production of goods and services sold.
[ Cost of Sales ;
Cost of Goods Sold ;
Direct Costs_or_Expenses ] ... all of these terms mean the same thing; some may be _fixed_ such as the rental on a dishwashing machine, some may be _variable_ such as the ingredients used to make pies.
Indirect Costs_or_Expenses : How much would be spent during a fictional 0-production month, such as in pre-opening, on [ labour ex-production ], [ materials ex-production ], [ utilities ex-production ], [ ads ], [ interest owed on loans ], [ amortised charges like annual fees ], [ depreciation of CAPEX ], etc.; some may be _fixed_ such as the rental of a premise, some may be _variable_ such as seasonal maintenance.
Direct Costs :
= [ total costs ] - [ indirect costs ]
... therefore
*NET SALES is sales, [after deducting allowances, discounts, and returns], but [before deducting the following]*
- fee of : performance marketing
- fee of : middleman (POS, platform, etc.)
- fee of : PSP / payment service providers
- fee of : transportation / delivery
- cost of labour for production
- cost of materials for production
- cost of utilities for production
*PROFIT a.k.a. EARNINGS a.k.a. INCOME*
Gross Profit :
= [ net sales ] - [ direct costs ]
At this point in the income statement, we encounter *EB-salad* because there are all sorts of "Earnings Before X" subtotals which an author may choose to write about. But in general ...
Net Profit :
= [ gross profit ] - [ indirect costs ] - [ tax ]
No comments :
Post a Comment