[Market-farming] big difference between gross profit and gross profit MARGIN

Steven Rogers singingpigfarm at earthlink.net
Fri Feb 4 20:03:52 EST 2005

If you read my email closely you will see that I said GROSS PROFIT MARGIN not gross profit. 2 totally different things.
Gross profit margin=((gross sales-cost of sales)/gross sales)X100
Read closer still and you will see that I said my gross profit margin averages about 65%. The 50% figure you are quoting is my threshold figure used when evaluating a business opportunity. Over 50%gpm=yes, under50%gpm=no.
As I further stated, Singing Pig Farm, Inc is a corporation. As president of the corporation is receive a salary every 2 weeks. I have a payroll service that cuts the checks for myself and my one employee. As a shareholder of the corporation, I also receive dividends on the company stock that I own. I personally own the farm and lease it back to the corporation which is a third income stream for me. I also have a 401K plan which I contribute to with pretax money and the corporation matches it. I pay only self employment tax on my conntribution and on the company match no taxes are paid .  I am straight salary,overtime exempt status which means that I get paid the same salary every 2 weeks no matter how many hours I work.
My cost of sales for the gross profit margin includes the following: seeds, irrigation, fertilizer, cultivation, harvest, packing, distribution/ Included in these items are fuel, hourly rate for equipment, hourly rate for labor. From the gross sales comes taxes, my salary, depreciation and land costs to arrive at the net.
Please do dust off your fianacial books.
Steven Rogers
singingpigfarm at earthlink.net
EarthLink Revolves Around You.
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