Net profit (net profit) = gross profit-expenses-income tax
Gross profit is the basis of net profit. The gross profit of the company directly determines its net profit, which is finally distributed to the major shareholders. If it is a listed company, the profit will directly affect the stock price trend.
Gross profit and net profit of different industries vary greatly.
There are many factors that affect gross profit. It is said that gross profit will vary from industry to industry, but there are other factors, such as non-recurring gains and losses. Because of sales expenses, management expenses, financial expenses, income tax, etc. All enterprises are fixed, and the difference between non-recurring gains and losses can be great, which indirectly affects the net profit.
Extended data:
There are two main ways to improve gross profit margin. First of all, we can raise the price of our products. Second, it can reduce the production cost of products. Of course, both are easier said than done.
Raising product prices may lead to a decline in sales. If the sales drop sharply, the total income may not be enough to cover the operating expenses. The price increase also needs a deep understanding of inflation rate, competitive factors, the basic supply and demand relationship of products and so on.
The second way to improve the gross profit margin is to reduce the variable cost of producing products. This can be achieved by reducing the cost of raw materials or improving the production efficiency of products. Full discount is a good way to reduce the cost of raw materials.
The more raw materials you buy from suppliers, the more likely they are to offer special discounts. Another way to reduce the cost of raw materials is to find suppliers with lower prices. However, if the quality of raw materials provided by the other party is not good enough, then you have to sacrifice the reduction of raw material quality.
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