Finance Without Fear by William S. Hettinger & John Dolan-Heitlinger

Author:William S. Hettinger & John Dolan-Heitlinger [Hettinger, William S.]
Language: eng
Format: epub
Publisher: The Institute for Finance and Entrepreneurship, LLC
Published: 2010-09-14T16:00:00+00:00

Trend Analysis

It’s also important to understand how your margins are changing over time and what these changes mean to your business’s profitability. In order to spot trends affecting their businesses early, many companies conduct monthly, weekly, or even daily analysis of their margins.

An increase in your gross margin indicates the business is now earning more gross profit on each sale. This could be the result of an increase in your prices, a change in your product mix to higher gross margin products, or a decrease in your cost of goods sold or cost of services.

A decrease in your gross margin indicates that the business is now earning less gross profit on each sale. This could be the result of a decrease in your prices, a change in your product mix toward lower gross margin products, or an increase in your costs of goods sold or cost of services that you didn’t pass through to the customer in the form of a price increase.

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