The indicator allows you to make a decision based on financial data. The purposes of its application:
making forecasts and spending the budget correctly. Calculating expected profitability and assessing the cost of goods sold help determine the overall profitability indicator. This information can be used to correctly redistribute resources, revise investment programs, and for other purposes;
performance evaluation. By comparing the actual margin with industry profitability statistics, it is possible to evaluate the company's performance and sometimes revise the management strategy;
investment analysis. A company that wants to attract investors must have a good profitability percentage, since investors will not be interested in a business with low margins.
What should be the gross margin value?
There is no ideal gross profit margin indicator, as it is a variable belize cell phone number list value. However, there are industry averages. Of course, you should not strive for them blindly. After all, each business has its own specifics of management, products sold, operating model, position among competitors. All this significantly affects the final percentage of marginality. To get an idea of the ideal gross margin, you need to analyze it taking into account other KPIs, such as profitability, revenue, net profit.
For clarity, we will provide approximate values for retail and manufacturing.
In retail, the type of product significantly influences the percentage of marginality. 30% is usually considered as a benchmark.
For example, a fashion clothing company earned 1 million rubles, while the cost of goods sold was 700,000 rubles. Let's calculate the overall profitability indicator: 1,000,000 - 700,000 rubles = 300,000 rubles. This is the amount the company received minus the cost of production and sale of goods. That is, the marginality indicator is 30%.
In the manufacturing sector, the percentage of marginality depends on the production niche and type of product. Thus, for woodworking enterprises, a good profitability indicator is 45–50%.
For example, a wood products manufacturing plant has a net profit of 2,000,000 rubles, but spends 1,000,000 rubles on production and sales of goods. The total marginality will be: 2,000,000 rubles - 1,000,000 rubles = 1,000,000 rubles, i.e. 50%.