# Profit Improvement Calculator

Having produced a first draft of your financial projections it is possible to make significant improvements in the profitability (net income) of the business by making minor adjustments to four key areas of the income statement. This profit improvement calculator shows the impact on net income of these adjustments.

The four key areas can be summarized follows:

1. Unit selling price
2. Unit cost
3. Unit sales
4. Operating expenses

## Using the Profit Improvement Calculator

The profit improvement calculator which is available for download below is used as follows:

Details relating to the current position are entered in the Before column of the calculator.

1. ### Enter Product Selling Price and Cost

Enter the current unit selling price and cost of the product in the before adjustment column. In the event that there are multiple products, a weighted average should be used. The profit improvement calculator works out the gross margin and gross margin percentage for the product.

2. ### Enter Unit Sales

Enter the current unit sales volume. Based on the product details and the unit sales volume, the calculator calculates the total revenue, cost of sales, and gross margin for the business.

3. ### Enter Operating Expenses

Enter the amount of the current fixed operating expenses. The calculator works out the net income and net margin percentage of the business.

## Percentage Change Column

Enter the percentage change to each of the four key areas. If the change is an increase enter a positive percentage e.g. 3%, if the change is a decrease enter a negative percentage e.g. -3%.

1. ### Enter % Change in Selling Price

Enter the percentage change in the unit selling price of the product. The profit improvement calculator works out the revised selling price.

2. ### Enter % Change in unit cost

Enter the percentage change in the unit cost of the product. The calculator works out the revised unit cost.

3. ### Enter % Change in Unit Sales

Enter the percentage change in the unit sales volume. The calculator works out the revised unit sales.

4. ### Enter % Change in Operating Expenses

Enter the percentage change in the fixed operating expenses of the business. The calculator works out the revised operating expenses.

The profit improvement calculator works out the product details and income statement information following the adjustments to the four key areas and presents these in the After column of the calculator.

Finally, the calculator shows the change and percentage change in net income as a result of the adjustments.