Business Mathematics Profit & loss, sales and cost of goods sold by Dr. Vincent BE Sangalang y DB Samson

1. Profit & Loss, Sales and
Cost of goods sold
© Prof. Vincent Sangalang. All Rights Reserved.
May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole
or in part.

2. Profit and Loss & Inventory
 The ultimate goal of every business is to gain profit
whether the business is conducted by a vendor
selling apples or whether the business consist of a
large conglomerate dealing with all kinds of goods,
from cosmetics, to clothing, to canned goods and to
machines and other types of human necessities.
 Inventory means taking the value of stock of goods
on hand. Inventory may be done monthly, quarterly,
semi-annually or annually.

3. Formulas:
 Profit = Sales – Cost
 Available goods for sale = Beginning Inventory +
Total Purchases
 Cost of Goods Sold = Total Available Goods for sale –
Ending Inventory
 Gross Profit = Total Sales – Cost of Goods Sold
 Net Profit or Net sales = Gross Profit or Net sales –
Operating Expenses

4. Formulas Continuation…
 Percent profit = Net Profit/Net Sales
 Percent overhead (expenses) = Total expenses/Net
Sales
 Percent loss based on net sales = Net Loss/Net Sales
 Percent loss based on cost and expenses = Net
loss/Cost & Expenses.

5. Important notes:
 If the operating expenses is greater than the gross
profit, there is a net loss instead of net profit.
Although gross profit is never a loss because the
store has to sell goods at a higher price than the
amount it paid for the goods, the store may still
incur a net loss.
 The net profit is the true profit of the store after it
deducts the expenses it incurred in selling the goods.
© Prof. Vincent Sangalang. All Rights Reserved.
May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole
or in part.