# CN0703 - Calculation of Gross Profit Percentage by lindash

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Level 13, Education Building
Site Finance Fact Sheet                                                                   31 Flinders Street,
CN0703                                                                         For further support contact
1800 100 191

Calculation of Gross Profit Percentage

It is imperative that the financial performance of all canteens be closely monitored to ensure
costs are being met and anticipated gross profit achieved. A key indicator of the level of a
canteen’s financial performance is the gross profit percentage.

The calculation of a gross profit percentage will identify whether the required mark-up
percentage has been achieved. If this percentage is monitored frequently, recommended
once a term, this will enable the canteen to make changes to the mark-up percentage in a
timely manner limiting the affect of under performance.

The basis of the percentage calculation will be determined from the canteen’s Profit and Loss
Statement at the chosen reporting date.

Note: As the gross profit percentage is determined from the Profit and Loss Statement, it is
essential that all revenue and expenses be included as at the reporting date. Entries that
must be brought to account include:
1. The recognition of inventory (stock). Refer to Fact Sheet “Recognition of Inventory
(Stock on Hand)”
2. Accounts Payable invoices not yet entered into EDSAS.
3. Accounts Receivable invoices not entered into EDSAS for sales made on credit.
4. Out-of-date/discarded stock. Refer to Fact Sheet “Stock Control”

Calculating the Gross Profit Percentage
Step 1: Print a Profit and Loss Statement for the required period.

1. Finance Module/General Ledger/Reports/Profit & Loss Statement
2. Enter level 3 and the period in which analysis is being performed (ie period when
stock-take has taken place and information entered into EDSAS.
3. Print the Profit and Loss Report.

Step 2: Using the Profit and Loss Statement (Level 3) for the required reporting date enter the
required information into the following table:

Sales (R-ZNA-6870)                                        \$
less Cost of Goods Sold including packaging
\$
(E-ZNA-7166)
Gross Profit                                              \$
Calculate Gross Profit Percentage
%
(Gross Profit/Sales x 100)
Identify Mark up Percentage
%
(Using the Mark-up/Percentage Table)

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Note: The above table and calculation are available from the following link ssonet/Site
Finance/Finance Fact Sheets/Gross Profit & Sales Analysis

Step 3: Compare the calculated gross profit percentage and subsequent mark up percentage
with the required percentages as determined at the beginning of the year.

Step 4: Where there is a variance between the actual mark up achieved and the required
mark up, consideration must be given to why the variance has occurred. A list of
factors is included with the spreadsheet.

Sales Analysis
In addition to the calculation of the gross profit percentage calculation, a sales analysis has

The purpose of the sales analysis is to determine whether the sales targets for the canteen
were met for an average week or day over a reporting period. Where a mark up percentage
variance has occurred the sales analysis will reflect the variance in dollars terms for an
average week or day. This will allow the users of the information to determine the severity in
dollars terms of the variance.

Finance Fact Sheet: CN0703 - Calculation of Gross Profit Percentage                                     Page 2 of 2
Site Financial Resources 1800 100 191

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