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Moritz

on Jan 16, 2023

Global

Question about

Gross profit

Dear all,

why do we base the gross profit on sale sof previou syear? In the first step we calculate the expected sales (c. 500 m EUR) and then use 590 m EUR as base for the gross profit - why? In my case I assumed the sales split from the year before but used the c. 500 m EUR in sales. Thus i get a gross profit of 120m equal c. 24% margin…

Any help or answer is highly appreciated!

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Top answer

Ian

Coach

on Jan 18, 2023

Hi Moritz,

You need to help us help you.

There are about 10 different calcualtions in this case (difference price points, years, etc.)

Can you please specificy exactly what section you're talking about and which exact calculation?

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Hagen

Coach

on Jan 18, 2023

#1 recommended coach | >95% success rate | 8+ years consulting, 8+ years coaching and 7+ years interviewing experience

Hi Moritz,

I think this is an interesting question that may be relevant for many people. I would be happy to share my thoughts on it:

I understand your confusion. The reason for basing the gross profit on the sales of the previous year is because it allows us to have a benchmark to compare against. By using the 590 million EUR as the base, we can see how the current year's sales compare to the previous year's sales and make adjustments accordingly.
However, it's important to keep in mind that this is just one factor in determining gross profit and other factors such as cost of goods sold and expenses should also be considered.

If you would like a more detailed discussion on how to address your specific situation, please don't hesitate to contact me directly.

Best,

Hagen

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