This **profit calculator** estimates the gross profit margin, gross profit value and the mark up percentage by considering the total revenue, expenses & gross margin rate. There is in depth information on how to determine these figures below the form.

## How does this profit calculator work?

The financial tool can help when trying to determine the profit percentage often called as gross profit margin (absolute or relative figure) and the mark up percentage, by 2 tabs as explained below:

- 1st tab is named “Method 1” and takes account of total revenue value and the gross profit margin, while applying the following formulas:

- Gross profit value which is obtained by applying the gross profit margin to the total revenue figure.

- Cost value which is determined by subtracting the gross profit from the total revenue;

- Mark-up is calculated by dividing the gross profit by the cost figure then multiply the result by 100 in order to have it in percentage format.

- 2
^{nd}tab of this*profit calculator*is named “Method 2” and uses the total revenue and cost values, while applying these equations:

- Gross profit margin % which is calculated in 2 steps: First subtract from the total revenue the total expenses figure. Then divide the value obtained previously by the total revenue, then multiply it by 100 in order to have it as percentage.

- Gross profit which is computed by subtracting the total expenses from total revenue.

- Mark-up percentage is calculated by dividing the gross profit by the total expenses given.

## What is profit?

At the most basic level profit can be defined as a result of a economic activity determined as a difference between the revenue generate by a business/activity/sale and the expense associated with it.

In finance it represents an important indicator and can be either gross (before tax) or net (after tax).

## Example of 2 scenarios

Case 1: a business generates total sales revenue of $100,000, while its gross profit margin is 10%. Let’s figure out the profit figures:

■ Gross profit = $10,000.00

■ Cost = $90,000.00

■ Mark up = 11.11%

Case 2: a retail company registers total revenues of $500,000, while its total expenses are estimated at $237,901. Let’s determine its profit figures:

■ Gross profit margin = 52.42%

■ Gross profit = $262,099.00

■ Mark up = 110.17%

04 Mar, 2015 | 0 comments
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