About This Chapter
Profitability Analysis - Chapter Summary
With this chapter, you can get reacquainted with the concept of profitability analysis. The lessons in the chapter walk you through the steps for calculating different formulas associated with this analysis process. View examples of these formulas and see how they apply to financial accounting practices in the real world. At the end of the chapter, you will be prepared to:
- Describe profitability
- Identify the profitability analysis process and income measurement
- Analyze the concept and definition of revenue
- Check out the formula for determining cost of goods sold
- Define how to calculate a gross profit
- Examine formulas related to gross profit margins
- Explain economics in relation to total revenue
- Point out the formula connected to the percentage of sales method
- Offer examples of variation and expense analysis in accounting
Are you constantly on the go and afraid you won't be able to get in any study time for an upcoming accounting exam? No need to worry, because our mobile-friendly platform has you covered. We put all of our lessons, evaluation tools, and everything else online for you with around-the-clock access. All you need is an Internet-ready device, and you can take all of our materials with you. No need to buy any extra books, or drag your study materials with you from place to place. Just take your phone, tablet, or laptop, and you can access everything from one, easy-to-navigate location online. Not only does 24/7 online access make it faster to review our study materials, but it also means our site can accommodate practically any schedule.
1. What Is Profitability? - Definition & Analysis
Profitability determines whether a business stays in business. In this lesson, you'll learn about profitability and different ways to analyze it. A short quiz follows the lesson.
2. What Is Revenue? - Definition & Concept
Revenue is essential for nearly every type of business. In this lesson, you'll learn what revenue is, what it's not, and how it fits into the overall income of a business. You'll also have a chance to reinforce your knowledge with a short quiz.
3. Cost of Goods Sold on an Income Statement: Definition & Formula
Just because you earn revenue doesn't mean you've made a profit. In this lesson, you'll learn about cost of goods sold, including where it fits on an income statement and how to calculate it. A short quiz follows the lesson.
4. What Is Gross Profit? - Definition, Formula & Calculation
When we think of the word profit, we often think of how much money was made for doing something. In the accounting industry, there is more than one kind of profit. In this lesson, we'll discuss what gross profit is and how it is calculated.
5. How to Calculate Gross Profit Margin: Definition & Formula
In this lesson, you'll learn the purpose of calculating gross profit margin and explore its components. You'll also learn how to analyze the results of the calculation.
6. Total Revenue in Economics: Definition & Formula
Learn what total revenue is and why it is important to understand. Discover the formula to calculate total revenue and find out how you can maximize your total revenue in business.
7. The Percentage of Sales Method: Formula & Example
Businesses need to forecast their sales growth on an annual basis and determine their borrowing needs. In this lesson, you will learn about the percentage of sales approach to financial forecasting.
Earning College Credit
Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.
To learn more, visit our Earning Credit Page
Transferring credit to the school of your choice
Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.
Other chapters within the Certified Management Accountant (CMA): Study Guide & Test Prep course
- Financial Statements Overview
- Financial Valuation, Recognition & Measurement
- Financial Strategic Planning
- Budgeting Concepts for Accountants
- Forecasting Techniques in Business
- Budgeting Methodologies in Accounting
- Annual Profit Planning
- Financial Projections
- Cost & Variance Measures in Performance Management
- Responsibility Centers & Reporting Segments
- Performance Measurement in Accounting
- Cost Measurement & Systems
- Overhead Costs
- Understanding Supply Chain Management
- Business Process Improvement
- Governance, Risk & Compliance in Accounting
- Accounting Systems Controls & Security Measures
- Accounting & Enterprise Information Systems
- Data Governance
- Technology-Enabled Finance Transformation
- Data Analytics
- Basic Financial Statement Analysis
- Financial Statement Special Issues
- Basics of Corporate Finance
- Capital Management Overview
- Corporate Restructuring
- International Finance Practices
- Business Decision Analysis
- Risk Management for Business
- Investment Decisions
- Accountant Professional Ethics
- Certified Management Accountant (CMA) Flashcards