Is Your Gross Profit Margin Ratio % Falling?
Unsure of what Gross Profit Margin Ratio Analysis refers to and why it is so important?
No Idea Why or What to do About It?
Here you will find the Theory behind the Gross Margin % and solutions to understand the causes and how to correct the problems.
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Choices for Gross Profit Margin Ratio Analysis
Theory: Gross Profit Margin Ratio Analysis Explained
What is Gross Margin Analysis and how does it relate to your Profit? Learn when to use, data required, calculation, interpretation and future proofing.
Branch: How to Manage Pricing: Cost of Inflation
Costs like labour increase with inflation. If you don’t increase your price to compensate, you will bear all the costs of inflation. Have you discounted prices to stimulate sales? If the discount does not compensate for the reduced Profit per sale, your Gross Profit Margin will fall.
Branch: Managing Increased Materials Costs
Do you think that Inventory management is only for manufacturing businesses? All companies need to manage their stock costs – stationery through to large items. Re-order management, small batches, over and under stocking.
Branch: Increased Casual Labour Costs
Has your casual labour received a pay rise? Consider increasing prices. If they haven’t, then look at the labour efficiency. Processes, over staffing, training, morale, leadership. What is your Gross Profit Margin Ratio Analysis showing?
Branch: Decreased Operational Efficiency
Learn how to reduce waste (muda); the 80/20 rule; Theory of Constraints (TOC); people management; play a simulation game with dice. In addition, learn how to streamline your inventory and manage repetitive work. Also systematically conduct one-off projects. This will improve your Gross Profit Margin ratio.
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