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Progresso di Studio
Across all your exams
Taught in English
Questo esame si sostiene in inglese: le lezioni e le domande sono in inglese. L'interfaccia resta in italiano.
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Key formulas
Gross profit
Profit after direct production costs, before operating expenses.
Operating profit (EBIT)
Earnings Before Interest and Tax — the core operating result.
Net profit
Bottom line after interest and tax.
Contribution margin ratio
The share of each euro of revenue left after variable costs, available to cover fixed costs.
Break-even volume (units)
Units that must be sold before the firm covers all its fixed costs.
Break-even revenue
Same break-even point expressed in euros of sales rather than units.
Part 1 of 1
The income statement starts at the top line (revenue) and works down through layers of cost to reach profitability at each stage.
Revenue (also called turnover or sales): the total value of goods and services recognised in the period. Under the accruals concept, revenue is recorded when earned, not when cash is received — a credit sale counts the moment the invoice is raised.
Cost of goods sold (COGS): the direct costs tied to producing what was sold — raw materials, direct labour, factory overhead. It does not include head-office salaries or advertising.
Gross profit answers: "Are the products themselves profitable before we count any overhead?" A retailer buying goods for €60 and selling for €100 earns a €40 gross profit per unit. Gross profit margin = (Gross Profit ÷ Revenue) × 100.
Worked example
A clothing brand sells €800,000 worth of garments. The fabric, thread, and factory wages to make those garments cost €480,000 (COGS). Gross profit = €800,000 − €480,000 = €320,000. Gross margin = 320 ÷ 800 = 40%. Each euro of revenue leaves 40 cents to cover overheads and earn a profit.
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