Category: Profit

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Load shedding is good business

When load shedding first started, many years ago, we never imagined that it would become part of our daily life. It has become normal to expect load shedding, follow updates and plan our lives around it. In the darkest hour, there is always a light on the path. While load shedding is terrible for business

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What is Net Profit Percentage?

Net Profit % before/after Tax = Net Profit before or after Tax /Sales Net Profit % before/after Tax shows the profit per R1 of sales after all expenses, excluding/including tax Higher the Net Profit %, the higher the profitability, after expenses

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What is Gross Profit Percentage?

Gross Profit % is also known as Gross Margin % Gross Profit % = Gross Profit / Sales Higher the gross profit %, higher the profitability of business, after direct costs

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What is Net Profit?

Gross Profit Less Operating Expenses  = Net profit before tax Less Tax = Net Profit after tax Net Profit shows the profit, after all expenses, available to the owners of the business  

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What is Gross Profit?

Sales Less Cost of Sales = Gross Profit Gross Profit excludes operating expenses, interest and taxation Gross Profit shows the profit after deducting direct costs of making a product  

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What are Operating Expenses?

Operating Expenses Operating expenses arise in normal operation & running of the business – the day to day activities Operating Expenses not directly related to sale or production Examples Rent Salaries Travel

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What is a Prepaid Expense?

Prepaid Expense Prepaid expense is expense paid in the current the financial year in respect of the following financial year Prepaid Expense will decrease the expense in the Income Statement Prepaid Expense is shown under Current Assets, in the Balance Sheet

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What is an Accrued Expense?

Accrued Expense Accrued expense is expense incurred but unpaid at the end of the financial year Accrued Expense  will increase the expense in the Income Statement Accrued Expense is shown under Current Liabilities, in the Balance Sheet  

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What is the difference between Cost and Expense?

Cost versus Expense Cost is R value of economic resource to undertake an activity (e.g manufacture product or render service) Expense is the cost that has been used / benefit has flowed to the business Example Purchased material for R 1000, used R 800 in business.  Cost: R 1000 Expense: R 800

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What is Cost of Sales?

Cost of Sales Opening stock  Plus Purchases  Less Closing stock = Cost of Sales Cost of Sales is direct cost of product sold, shown in the Income Statement Opening/Closing stock is shown in Balance Sheet

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