See what the differences are between profitability and yield.
Profitability indicates whether sales are sufficient to cover expenses and generate profit. To calculate profitability, you need to compare net income with gross revenue.
To identify this value in the Nex report, it is necessary to use the following columns of the report of profitability by product sold (see here how to create the report):
In the example above, the product has a unit cost price of $10.00 and the unit selling price is $50.00. Thus, profitability is calculated by the following formula:
Profitability = (net profit ÷ gross revenue) x 100
Profitability = (column 1 ÷ column 2) x 100
Profitability = (40.00 ÷ 50.00) x 100
Profitability = 0.8 x 100
Profitability = 80%
Profitability indicates how profitable the sale of a given product was. In the example above, the profit was R$ 40.00, which is equivalent to 80% of the sale price.
Yield indicates the return that a given investment is generating. To calculate yield you need to compare net income with the amount invested (cost price). Nex still does not have a specific report for yield, however, it is possible to calculate it by looking at the same report:
Profitability = (net profit ÷ investment) x 100
Profitability = (column 1 ÷ column 2) x 100
Profitability = (40 ÷ 10) x 100
Profitability = 4 x 100
Profitability = 400%
In the example, the product's profitability is 400%, the same markup percentage.
The concepts of profitability and yield are different, but they are important for the financial control and monitoring the store, bringing results and complementary information. In the calculation seen above, the cost price of the product was R$ 10.00, while the selling price was R$ 50.00. The net profit obtained from this sale was R$ 40.00, that is, for every 1 product sold, it is possible to buy 4 new products. Therefore, it results in an 80% profitability and a 400% of yield.
