Gross Profit

Business Lesson 1 - Estimating Inventory Value Using Gross Profit

Business Lesson 1 - Estimating Inventory Value Using Gross Profit

I love incorporating business principles almost as much as I love using technology. They both have played a big role in my business success. As a small business consultant, I’m often asked the best way to estimate the value of inventory. One method is based on gross profit. Warning – this post does come with a quiz at the end.

The gross profit method of valuing inventory is a technique using a company’s historical or projected gross profit margin to estimate cost of goods sold during a period. The gross profit method assumes the gross profit ratio remains stable during the period.

Expense Control – One Rule to Rule them all

Expense Control – One Rule to Rule them all

There is simply one rule to live by in small business if you want to stay in business.  The rule is the change in your operating expenses should mirror the change in your gross profit.  This is typically called expense control.  However, it should be called the essential function of a business.  It’s essential because without it your company will die.