What are Different Types of Profit Calculators
An online profit calculator is must for any business to keep revaluation profits of a business. It calculates the amount of profit a business organization can expect to receive in one month, based on the entered variables. When the actual cost and the percentage of profit margin are entered, a reliable calculation of expected profit from total sales is received. Profit calculators help to determine the need to raise the price of goods or services so that enough profits can be achieved to meet company’s cash requirements. In a market today, there are several profit calculators being used to calculate monthly or annual profits, but the most common calculators which give accurate results are gross profit, net income, and cash flow.
GROSS PROFIT – Gross profit is a company’s residual profit after selling a product or service and deducting the cost associated with its production and sale and it can be calculated in terms of figures as well in ratio. It reflects efficiency with which a firm produces its products. As the gross profit is found by deducting cost of goods sold from net sales, higher the gross profit better it is. Gross profit is calculated by subtracting cost of goods sold from total sales and sales returns of particular time period. Gross profit ratio is calculated first by dividing gross profit to total sales and then multiplying by 100.
NET INCOME – Net income is called the bottom line of the business also called earnings or net profit. Net income, the most frequently viewed figure in a firm’s financial statements, is used in calculating various profitability and stock performance measures including price-earnings ratio, return on equity, earnings per share, and many others. It helps company to find out exact revenue earned.Net income is the amount of money a corporation has earned after subtracting all of the expenses of producing its goods or services from the income or revenue it has realized from sales of those goods or services.
CASH FLOW – Cash flow is another profit calculator which simply refers to the flow of cash into and out of a business over a period of time. Cash flows are also considered as earnings before depreciation and amortization expenses. For calculating cash flows, there are many formulas applies but the most used formula where net income, depreciation and amortization are first added and then capital expenditure is deducted from the sum to finally get cash flows which indicates the liquidity level of a business. This profitable calculator tells that weather the company has sufficient funds to meet its expensed or liabilities in near future.