AOTG: Difference between AOTG Net Profit Margin & Gross Profit Margin ratio

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Question: What is the difference between AOTG Net Profit Margin & Gross Profit Margin ratio?


Answer:

Net profit margin, or net margin, is equal to net income or profits divided by total revenue and represents how much profit each dollar of sales generates.

Net profit margin is the ratio of net profits or net income to revenues for a company, business segment or product. Most commonly, investors will refer to net profit margin as the "net margin" and describe it as "net income" divided by total sales instead of using the term "net profits."

Gross profit margin is a profitability ratio that measures how much of every dollar of revenues is left over after paying cost of goods sold (COGS).


1) Net Profit Margin:


User need login onto AOTG > Financial > Profit

Profit margin1.png

System will auto capture ratio by today. E.g. 0.997 (This Year) & 101.1 (Last Year)


You can refer P&L Statement

Profit margin2.png


The formulae derive from:

  • Net Profit = CR (Type: Gross Profit) - DR (Type: Gross Profit) + CR (Type: Net Profit) - DR (Type: Net Profit) [Sales(CR) - Sales Adjustment(DR) - Cost of Goods(DR) + Other Income(CR) - Expenses(DR)]
  • Sales = CR (Type: Gross Profit) - DR (Type: Gross Profit, Account Type: SA) [Sales(CR) - Sales Adjustment(DR)]


Net Profit Margin = Net Profit / Sales

This Year = 17842.40 / (18318.83 – 418.80) = 0.997

Last Year = 1009.99 / (9.99 - 0.00) = 101.1



2) Gross Profit Margin:


Login onto AOTG > Financial > Profit

Profit margin3.png

System will capture today ratio example: 0.967 (This Year) & 1 (Last Year)


You can refer P&L Statement

Profit margin4.png


The formulae derive from:

  • Gross Profit = CR (Type: Gross Profit) - DR (Type: Gross Profit) [Sales (CR) - Sales Adjustment (DR) - Cost of Goods (DR)]
  • Sales = CR (Type: Gross Profit) - DR (Type: Gross Profit, Account Type: SA) [Sales (CR) - Sales Adjustment (DR)]


Gross Profit Margin = Gross Profit / Sales

This Year = 17301.72 / (18318.83 – 418.80) = 0.967

Last Year = 9.99/ (9.99-0.00) = 1



By: Ck 180614, KM 180620, P180628



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