Peak Oil Myth Video

[2ndAmendment]

The formula for profit is:

(Total revenue - expenses)/total revenue. That will always be fractional; ie, less than one. That fraction multiplied by 100 gives you percent.

 

[2ndAmendment]

1 dollar is 100% profit, on the orginal dollar.

I don't know but any financial statement, or any of the several online portfolios I have entered my account into report my gains using this method.

Gains - not profit.

Profit is gains less original investment.

 

[AK-74me]

Gains - not profit.

Profit is gains less original investment.

Fair Enough, I think alot of people just go by the general defintion of the word profit = gain, advantage, benefit.

 

[2ndAmendment]

Fair Enough, I think alot of people just go by the general defintion of the word profit = gain, advantage, benefit.

There is a big difference.

Let's use the ORCL example.
current = $14
initial = $3
Gain = current - initial = $11
Percent gain = (gain / initial) * 100 = 11/3 = 366.67%

Now for a real stretch of the numbers, lets use total gain.

Percent Total gain = (current/initial) * 100 = 14/3 = 466.67%

percent profit = (gain/current) * 100 = 11/14 = 78.57%

So you have a 78.57% profit meaning that 78.57% of the current price is profit.

Brokers use percent gain and percent total gain because the numbers look so much bigger.

Retail uses either mark up or mark down methods to compute selling price.

The mark up method:
cost = $1
markup = 30% = .3
selling price = cost * (1 + markup) = 1 * 1.3 = $1.30

If you were to use the mark up method to compute you selling price and give a 30% discount, you would sell below your cost.

Selling price = $1.30
discount = 30% = .3
discounted price = 1.30 - (1.30 * .3) = 1.30 - .39 = $0.91

So you would be selling 9 cents below your cost.

The mark down method:
cost = $1
markdown = 30% = .3
selling price = cost /(1 - markdown) = 1 / .7 = $1.43


If you were to use the mark down method to compute you selling price and give a 30% discount, you would sell at your cost.

Selling price = $1.30
discount = 30% = .3
discounted price = 1.43 - (1.43 * .3) = 1.43 - .43 = $1.00

So you would be selling at your cost.

See. No 100% profit, and in retail, be careful how you set selling price and discounts.

 

[willie]

Quote:
Originally Posted by desertrat
If I buy an apple for a dollar and sell it to you for 2 dollars how much of a profit have I made?
.

50%. You have a 100% markup.

How do you get 50%?

 

[MMDad]

Quote:
Originally Posted by desertrat
If I buy an apple for a dollar and sell it to you for 2 dollars how much of a profit have I made?
.


How do you get 50%?

(Total revenue - expenses)/total revenue

$2.00 - $1.00 = $1.00 / 2.00 = .5 *100 = 50%

 

[willie]

$2.00 - $1.00 = $1.00 / 2.00 = .5 *100 = 50%

What is the purpose of figuring profit that way? For a "non accountant" it seems much more accurate to call 'profit' %the result of final sales minus all cost divided by original cost x 100. The word "markup" doesn't necessarily indicate sales price, it sounds more like what you want for the product.

My question should have been.....why those particular labels? "Markup" seems way out of place.

 

[itsbob]

Gross Revenue - Cost of Sales = Gross Profit

Gross Profit MARGIN is Gross Profit / Gross Revenue

Profit percentage would be Gross Profit/Cost

Margin is a way to measure if your business is doing as well as the rest of the industry, OR a way to check your book-keeping.. if you are in a 30% mark up business, and you figure your profit margin and it comes out to be 45% you are doing something wrong, or you are cooking your books.. If your profit margin comes out at 15% and the industry average is 35%, you may want to re-consider your career path.

It is possible to make more then 100% profit.. If the cost of goods sold is $100, and you sell them for $400 your profit MARGIN is 75% but your actual PROFIT is 300%

 

[Bruzilla]

Who cares how much oil we'll have in 100 years? Al Gore says we'll all be dead from global warming in 50.