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profitability_primer [2011/03/22 16:45 (13 years ago)] andrewprofitability_primer [2011/03/23 12:54 (13 years ago)] (current) andrew
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 **Figure 3 - Inventory cost and stock levels** **Figure 3 - Inventory cost and stock levels**
  
-The List price for the item sold will be posted to the income account for that item category (4xxx where xxx is the 3 digit category number).  The journal entry showing the invoice transaction can be displayed while in the invoice.  Use the Options button on the invoice followed by Invoice Options then Edit Single Transaction.  Figure 4 shows an example of +The List price for the item sold will be posted to the income account for that item category (4xxx where xxx is the 3 digit category number).  The journal entry showing the invoice transaction can be displayed while in the invoice.  Use the Options button on the invoice followed by Invoice Options then Edit Single Transaction.  The results will be displayed as in Figure 4.
  
 {{info_qa:ledger:invoice_ledgers.jpg|Figure 4 - Invoice ledgers}}\\ {{info_qa:ledger:invoice_ledgers.jpg|Figure 4 - Invoice ledgers}}\\
 **Figure 4 - Invoice backend report showing account postings** **Figure 4 - Invoice backend report showing account postings**
 +
 +In the Figure 4 example, the Cost of Goods sold are coming from Categories 130 and 220 .  The total cost of the inventory sold are taken from the 1200 inventory account.  The markup is applied giving us a list price which is posted to the 4130 and 4220 income accounts. The tax amount is added to the amount posting to income which is then applied to the Accounts receivable account.
 +
 +The profitability can be determined by subtracting the amounts in the 5000 accounts against the amounts in the 4000 accounts.  In the Figure 4 example the light is costed at $75 then sold at $172.50 giving a profit of $97.50.
 +
 +===== Profitability Reporting =====
 +
 +A profitability report ships with the default install of System Five.  It is accessed through General Ledger -> Ledger Reports -> Profitability.  This report calculates profitability by taking the difference between the Income and Cost accounts for each category and generating a percent profitability.
 +
 +The invoice report found under Reports -> Sales Reports -> Customer and Invoice Sales Reports -> Invoice report will generate a list of invoices based on the settings on the report.  The profit analysis selection can be included to add a column on the report for a dollar difference and a percent on margin calculation.
 +
 +
 +
 +===== Profitability Tour Video =====
 +
 +For an overview of System Five profitability use the link to the video below.
 +
 +[[http://wiki.wws5.com/share/profit_tour1103231146.html|Profitability Tour Video]]
  
  
profitability_primer.1300837517.txt.gz · Last modified: 2011/03/22 16:45 (13 years ago) by andrew