Example of calculating profit and margin

Lesson Details:

Video Transcription: Now let's go over an example of how to count the gross profit net profit and operating profit and the profit margins for all of these in a fictitious business plan for my mobile apps and of course the all the financial figures are fictitious because obviously I'm private about my own finances here this video is brought to you by Appy Pie’s Academy so the total revenue is 125 thousand the cost of goods basically Sally salary for programmers and which is me in this case and design is set to total sixty seven thousand dollars so I subtract that from 125 and you get that fifty eight thousand then we keep going that's the gross profit then we keep going the operating profit basically takes additional expenses for example I have marketing cost accounting cost other costs and so and these are listed here and you would figure out what those additional costs are for you and you would just subtract them further from the gross profit so I ended up with $54,000 as my operating profit and the net profit basically you subtract like taxes interest or debt so basically just further subtract and you get those numbers then you can calculate the profit margin for all of these you got your gross profit margin operating margin and net margin all you do is you take the original revenue you keep that number and whatever that number you came up with for the gross profit see I came up with 58,000 so you would put it here 15:42 thousand for the operating profit i just enter it here and so i divide for example the forty two thousand five hundred by 125 and then get point three four which is in percentage terms you essentially just say thirty four percent so your net profit margin is thirty-four percent gross profit margin is 46 percent and so on so that's how you do these calculations usually if you have more complex finances you would do this in Excel and itemize them line by line but here just because it's a relatively simple example I did it all for you here so that you can see how actually pretty easy this can be to calculate.