Net Revenue Vs Gross Margin Vs Net Income
Yes, these are all very different things! Watching the % of each can give you so much information about your business.
We want revenue to increase. We want the gross margin to increase. We want net income to increase.
Did you know they can all increase but watching the % increase of each tells a lot about the business?
If net revenue increased by 50% but gross margin only increased by 10% then that means your cost of goods has gone up more than your revenue. You either need to increase your pricing or you need to figure out how to lower your COGS.
Also, if net revenue has increased by 75% but net income only increased by 5%, guess what? That’s not that great! Your expenses went way up to get that revenue up but you’re really not taking home much more at the end of the day.
I love watching these %s monthly as well as over a period of time. Watching trends is so important in business!
If we notice numbers and % s getting out of whack, we want to know sooner than later and get back on track ASAP! We need to correct along the way before it turns into a big deal.
This is something I work with all advisory clients on. Do you need some help? Don’t know where to start? Schedule a free call – your success is inevitable!
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