Increasing income means increasing income. On the one hand, increasing production and sales, the profit rate will increase if the fixed expenses are less spread on the unit income. On the other hand, adjusting the product structure and producing more high value-added products can improve the profit rate, and in addition, if allowed, the price can be raised.
Saving expenses means reducing costs, reducing expenses and improving profit margins.
What is the operating profit margin?
The amount left after the enterprise pays off all the accounts is called profit. In accounting, profit can be divided into gross profit (the difference between sales volume and cost of goods sold), operating profit (the difference between gross profit and operating expenses) and net profit (the difference between operating profit plus non-operating income and income tax). Operating profit margin refers to the percentage of operating profit to net sales or the percentage of invested capital. This percentage can comprehensively reflect the operating efficiency of an enterprise or an industry. The operating profit margins of different industries and enterprises in the same industry vary greatly, and not all enterprises can make profits every year. In the United States, about 20% of enterprises fail to make profits or suffer losses to varying degrees. The way to determine the ideal profit point is to know whether the marginal revenue of selling a new unit product is greater than the marginal cost of producing the same new unit product. If the marginal revenue is greater than the marginal cost, then the new unit should produce, and as long as this situation continues, production should continue. On the other hand, if the marginal cost exceeds the marginal income, the output will be compressed. At the point where the marginal cost and marginal income are equal, the profit situation is the most ideal.
computing formula
Its calculation formula is:
Operating profit margin = operating profit/total operating income × 100%
Formula meaning
Operating profit is taken from the income statement, and all business income includes main business income and other business income (operating income).
The higher the operating profit rate, the more operating profit provided by the enterprise's commodity sales, and the stronger the profitability of the enterprise; Conversely, the lower the ratio, the weaker the profitability of the enterprise.
influencing factor
1. Sales quantity;
2. Average selling price of unit product;
3. Manufacturing cost per unit product;
4. Ability to control management expenses;
5. Ability to control marketing expenses.
trading profit
Operating profit = operating income (main business income+other business income)-operating cost (main business cost+other business cost)-business tax and surcharges-management expenses-sales expenses-financial expenses-asset impairment loss+fair value change income (loss is negative)+investment income (loss is negative).
Operating profit rate calculation formula: operating profit/operating net income.
Current ratio calculation formula: current assets/current liabilities
Quick ratio calculation formula: (current assets-inventory)/current liabilities
Capital profit rate formula: operating profit/capital.
The current ratio measures that the current assets of an enterprise can be converted into cash for repayment before the short-term debt expires.
Ability to repay current liabilities.
Quick ratio. Measure the ability of an enterprise's current assets to be immediately used to repay its current liabilities.
Inventory turnover rate measures the sales ability of an enterprise and whether there is excess inventory.
The calculation formula is
Inventory turnover rate = cost of goods sold/average inventory * 100%
Average inventory = (beginning inventory+ending inventory) ÷2
Of course, the operating profit rate reflects the profitability, and the capital profit rate reflects the capital profitability, that is, the return on capital.