Gross and Net Profit Report

This report splits profit into two stages so you can see whether the trading itself is healthy. Gross profit is sales minus the cost of goods sold; net profit is what remains after rent, salaries, depreciation and other overheads. BRAccount takes both from GL Entry: income accounts, the Cost of Goods Sold account posted by Delivery Notes, and the remaining expense accounts for the period. A Nepali trader with a good gross margin but a thin net margin is being eaten by overheads, while a poor gross margin means prices or supplier costs are the problem. Because cost of goods depends on stock valuation, an unposted Delivery Note or a wrong valuation rate shows up here first.

Gross Profit = Sales - Cost of Goods Sold; Net Profit = Gross Profit - Other expenses (rent, salaries, depreciation)

1. 01Go to Financial Reports > Gross and Net Profit Report.
2. 02Set Company, Fiscal Year 2083-2084, From Date and To Date; tick Include Default Book Entries.
3. 03Read Sales, Rs 64,000 in the demo, and the Cost of Goods Sold line below it.
4. 04Gross Profit is the difference; divide it by Sales for the gross margin percentage.
5. 05Read the other expenses, including depreciation of Rs 1,235.54 a month, down to Net Profit.
6. 06If gross profit looks too high, check that every Delivery Note of the period is submitted.
7. 07Drill into Cost of Goods Sold in the General Ledger to see which deliveries drove the cost.

Open monthly to see whether margins come from trading or get eaten by overheads.

Sales Rs 64,000 less cost of goods gives gross profit; depreciation and rent then reduce it to net.