1. What is Profit On Turnover?

Profit On Turnover (also known as Profit Margin) is a financial metric that shows what percentage of a company's revenue is actual profit. It measures how much out of every dollar of sales a company actually keeps in earnings.

2. How Does the Calculator Work?

The calculator uses the Profit On Turnover formula:

Where:

• \( \text{Profit} \) — Net profit in dollars (revenue minus all expenses)
• \( \text{Turnover} \) — Total revenue/sales in dollars

Explanation: The formula calculates what percentage of total sales remains as profit after all expenses are deducted.

3. Importance of Profit On Turnover

Details: This metric is crucial for assessing business efficiency, comparing performance across industries, and making strategic decisions about pricing, cost control, and growth.

4. Using the Calculator

Tips: Enter profit and turnover amounts in dollars. Both values must be positive, and turnover cannot be zero.

5. Frequently Asked Questions (FAQ)

Q1: What's a good Profit On Turnover percentage?
A: This varies by industry, but generally 10-20% is good, while 5% might be typical for low-margin businesses like grocery stores.

Q2: How is this different from markup?
A: Markup is the percentage added to costs to determine selling price, while Profit On Turnover shows what percentage of revenue is profit.

Q3: Should I use gross profit or net profit?
A: Typically net profit is used, but you can calculate both gross and net profit margins for different insights.

Q4: Why is my Profit On Turnover negative?
A: A negative value means expenses exceed revenue - the business is operating at a loss.

Q5: How often should I calculate this?
A: Regular calculation (monthly/quarterly) helps track business performance trends over time.