Results 1 to 4 of 4

Thread: Loss as a percentage of NP

  1. #1
    Junior Member
    Join Date
    May 2018
    Location
    Paarl
    Posts
    23
    Thanks
    3
    Thanked 1 Time in 1 Post

    Loss as a percentage of NP

    I apologise if this is the incorrect thread. Okay, so stock losses come directly off the bottom line, right?

    So if you are lucky enough to run at a NP percentage of 10% of turnover, and you write off a R300 part, you have to do a turnover of R3000 to recoup the loss.

    But, if your business is running a loss because of stock (and cash, but that's a whole other story) loss etc. How do you calculate he amount of turnover needed to recoup that loss?

  2. #2
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    22,648
    Thanks
    3,304
    Thanked 2,676 Times in 2,257 Posts
    Blog Entries
    12
    Quote Originally Posted by Bobby Knight View Post
    But, if your business is running a loss because of stock (and cash, but that's a whole other story) loss etc. How do you calculate he amount of turnover needed to recoup that loss?
    If you really need that number (I can only assume because stock losses are an embedded risk for some reason and you have to provide for the risk rather than prevent it), you should perhaps frame it around gross profit (ordinary income less cost of sales) rather than EBITDA or nett profit.

  3. #3
    Junior Member
    Join Date
    May 2018
    Location
    Paarl
    Posts
    23
    Thanks
    3
    Thanked 1 Time in 1 Post
    Those that is within my power to try and prevent I have put some procedures and controls in place. Some of it is beyond my control and I was hoping to use this reality to 'scare them straight' and using net profit would have more of an effect than gross profit, but will use GP then...

  4. #4
    Diamond Member Blurock's Avatar
    Join Date
    May 2010
    Location
    Durban
    Posts
    4,151
    Thanks
    758
    Thanked 886 Times in 735 Posts
    Blog Entries
    7
    Quote Originally Posted by Dave A View Post
    If you really need that number (I can only assume because stock losses are an embedded risk for some reason and you have to provide for the risk rather than prevent it), you should perhaps frame it around gross profit (ordinary income less cost of sales) rather than EBITDA or nett profit.
    Agreed Dave, stock losses due to pilferage/shoplifting or perishable goods should be added to cost of sales. That can be fairly accurately calculated from historical trends and added to your input cost.
    Excellence is not a skill; its an attitude...

Similar Threads

  1. Replies: 27
    Last Post: 03-Apr-23, 10:22 AM
  2. What percentage tax will i pay?
    By r888 in forum Tax Forum
    Replies: 1
    Last Post: 08-Jul-17, 11:29 AM
  3. [Question] Union representation percentage
    By roryf in forum Labour Relations and Legislation Forum
    Replies: 6
    Last Post: 14-Feb-14, 10:15 AM
  4. Set service charge fee as percentage of sale
    By nkris in forum Accounting Forum
    Replies: 3
    Last Post: 02-Dec-13, 12:20 PM
  5. [Question] Ownership percentage with foreign partner
    By qophelo in forum General Business Forum
    Replies: 1
    Last Post: 07-Feb-11, 04:41 PM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •