ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARY
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FINANCIAL FORECASTS Definition
FINANCIAL FORECASTS are prospective financial statements that present expected future financial position, results of operations, and cash flows based on expected conditions, i.e. a financial forecast is of the most likely future scenario.
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CONSUMABLE is a resource attribute representing a type of capacity. A resource with consumable capacity can have its capacity value permanently altered as a result of being tasked, e.g. chemicals in a manufacturing process or office supplies.
GROSS PROFIT MARGIN ON SALES (GPM) is one of the key performance indicators. The gross profit margin gives an indication on whether the average markup on goods and services is sufficient to cover expenses and make a profit. GPM shows the relationship between sales and the direct cost of products/services sold. It measures the ability of both to control costs and to pass along price increases through sales to customers. The gross profit margin should be stable over time. A persistent gradual decrease is likely to indicate that productivity needs to be increased to return profitability back to previous levels. Generally:
>40% = Indicates a sustainable competitive advantage
< 40% = Indicates competition may be eroding margins
< 20% = There is likely no sustainable competitive advantage
Formula: Gross Profit / Net Revenue
