a.k.a. Sales turnover, income from sales
This is the money the business receives from customers in exchange for products/services.
Number of Items Sold x Selling Price. (SR = NIS x SP)
Cost of Sales
This is the costs the business incurs in order to make the products to sell.
Opening Stock + Purchases – Closing Stock
CoS = OS + P - CS
The Gross Profit is profit from sales once the cost of sales has been deducted.
Sales – Cost of Sales (GP = S – CoS)
Expenses, also known as Overheads.
Expenses are the ‘running costs’ a business has in order to make and sell the product. This commonly includes expenses such as wages and salaries; rents, rates and insurance; Light, heat and power; telephone and broadband.
E+E+E+E = TE
Net Profit is the profit once the expenses have been deducted.
Gross Profit – Total Expenses.
NP = GP – TE