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11 Profitability Measurements to Understand

Measuring and understanding the profitability of a business is vital to its success.

The accounts that help to measure and effect your profitability include:

Profit and Loss 




the total amount the business generates from the sale of its goods and / or services




Revenue Growth Percentage

the percentage change in revenue from one period to another



Gross Margin

the difference between the revenue and the cost of goods / services sold




costs that the business incurs that cannot be directly related to a revenue activity



Overheads Percentage

overheads as a percentage of revenue



Operating Profit

revenue less COG/SS and overheads.



Operating Profit Percentage

operating profit as a percentage of revenue





revenue less COG/SS and overheads



Net Profit

allows for the taxes associated with profits



Net Profit Percentage

as a percentage of revenue



Retained Profits

accumulated of net profits / losses less dividends paid to shareholders



If you would like to discuss further, please contact us:

McNamara & Company - Chartered Accountants, located minutes from the Melbourne CBD
Phone +61 3 9428 1062

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