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For example, total revenue will rise due to an increase in quantity if the percentage increase in quantity is larger than the percentage decrease in price. The percentage change in the price and quantity determine whether the demand for a product is elastic or inelastic .
Market share is the percentage of the total revenue or sales in a market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those units would have a 10 percent share in that market. "Marketers need to be able to translate sales targets into market ...
Profit margin is a financial ratio that measures the percentage of profit earned by a company in relation to its revenue. Expressed as a percentage, it indicates how much profit the company makes for every dollar of revenue generated. Profit margin is important because this percentage provides a comprehensive picture of the operating efficiency ...
It is a measurement of what proportion of a company's revenue is left over, before taxes and other indirect costs (such as rent, bonus, interest, etc.), after paying for variable costs of production as wages, raw materials, etc. A good operating margin is needed for a company to be able to pay for its fixed costs, such as interest on debt.
In accounting, the revenue recognition principle states that revenues are earned and recognized when they are realized or realizable, no matter when cash is received. It is a cornerstone of accrual accounting together with the matching principle. Together, they determine the accounting period in which revenues and expenses are recognized. [1]
Gross margin, or gross profit margin, is the difference between revenue and cost of goods sold (COGS), divided by revenue. Gross margin is expressed as a percentage. Generally, it is calculated as the selling price of an item, less the cost of goods sold (e.g., production or acquisition costs, not including indirect fixed costs like office ...
Total costs = fixed costs + (unit variable cost × number of units) Total revenue = sales price × number of unit These are linear because of the assumptions of constant costs and prices, and there is no distinction between units produced and units sold, as these are assumed to be equal.
The Break-Even Point. The break-even point (BEP) in economics, business —and specifically cost accounting —is the point at which total cost and total revenue are equal, i.e. "even". In layman's terms, after all costs are paid for there is neither profit nor loss. [1][2] In economics specifically, the term has a broader definition; even if ...