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What is gross, net and operating profit margin and how to calculate it in Excel

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What is gross, net and operating profit margin and how to calculate it in Excel

It is natural for every company or business to have a daily management system for the profits obtained from the sales of a product. But it is very true that there are terms and data that can help facilitate this work, for this we will talk about the profit margin.

What is the profit margin?

The profit margin is the inequality between the amount of sale of an item or service, fixed and variable expenses. This in-so is related to the processes of commercialization and maintenance of a company or company.

Why is profit margin important?

For a company to function well internally, it is important to take into account everything that the profit margin implies. Knowing the difference in the price of an item and its elements involved will allow having data that will help to visualize if the applied strategy is profitable.

Taking the profit margin into account will allow a company, whether a sole proprietorship or corporate, to understand whether the distributors are the right ones to boost resources. By having a profit margin, you will be able to answer questions that arise as a project progresses, and they are these:

  1. Does the sale that is made satisfy the needs of those who make up a company or team?
  2. Is there a way to minimize the expenses that are made in the production, without affecting the quality of the product?
  3. Is the marketing strategy that is implemented to generate more profits functional and practical?

What is gross, net, and operating margin?

Next, we will show you a brief explanation in the form of an outline of what a net, gross, and operating profit margin is.

What is gross, net and operating profit margin and how to calculate it in Excel

The gross profit margin: It refers to what is earned after deducting the final price of the direct and indirect costs in the production of an item.

The net margin: It is the one that is acquired once the fixed expenses such as water, electricity, services among others that are carried out around the business are subtracted.

Operating profit margin: This is a financial percentage that measures the performance of a company, through the functions acquired before the payment of taxes and interests.

Calculate Profit Margin in Excel How?

  • Open the Excel program and create a new spreadsheet where you will use the columns ‘Revenue’, ‘Cost of Production’, ‘Profit’, and ‘Profit Margin’.
  • In the column labeled ‘Income’, you will enter the price of one of the items on offer.
  • In the column ‘Cost of production,’ you will add the total cost that involves labor plus services.
  • Identify the gross profit, this will be updated in the column ‘Profit’. Here you will enter a calculation formula that subtracts the cost of production data from the data in the Income column, the formula is = B2-C2.
  • To calculate the profit margin or percentage, you must change the formula mentioned above and it would be D2 / B2 * 100.
  • To keep a more accurate control, make a column to record the data of the number of items you sell per day. To do this, use the following formula = B2 * (plus the price of the item), where B2 corresponds to the number of products sold, and the amount you place after is the amount that the product is canceled.
  • Copy the formulation down, in order to have the totals for each item, at the same time select the addition formula and the boxes that correspond to the same data.
What is gross, net and operating profit margin and how to calculate it in Excel
  • Next, in another Excel sheet within the same file that you already have, you will create columns that have the following data ‘Fixed Expenses’, ‘Variable Expenses’, ‘Total Expenses’, and another called ‘Profit’.
  • For this new sheet to be updated exactly like the previous one, you just have to press the equal sign (=) next to the box where the total profit for the month is and press ‘Enter’.
  • To calculate the net profit, you just have to apply the formula that we have explained to you in previous steps.
  • Finally, you will write the formula that responds to the percentage margin of net profit.

We have successfully concluded this article, we hope it will be very useful and although it is a bit tedious, it is important for your company.

Excel

How to use the INTERVAL.TRUST.NORM function in Excel

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How to use the INTERVAL.TRUST.NORM function in Excel

Obtaining accurate statistical results will require the use of multiple tools. Excel is indisputably one of the most prominent, so today we explain the basics of how INTERVAL.TRUST.NORM function is used in Excel, one of those useful statistical functions in certain circumstances.

What is a confidence interval?

The world of statistics is complex, requires constant study and there are many issues to consider. Among the many parameters within the general statistics, we find the “Confidence interval“, a function that is also present within Excel. In fact, it is convenient to know how to use the functions (INV.F) and (INV.F.CD), which also tells us about statistical intervals.

In any case, the first thing to do is to know what a confidence interval is, since as we pointed out, statistics represent a certain degree of complexity and it is highly recommended to be aware of the terms. Regarding the confidence intervals, we can summarize them as the confidence value for an unknown value in relation to a population analysis.

We say that confidence value since it is a relatively predictable value and that in many cases it is close to the final result. Clearly, all this procedure is done from the data obtained from a population sample, even so, this parameter intervenes precisely when there is an unknown factor in any sample.

How to use the INTERVAL.TRUST.NORM function in Excel

Certainly the INTERVAL.TRUST.NORM function is not useful for making a spreadsheet to control credit payments in Excel, but it is not useless for this reason. In fact, it is a useful function for workers and professionals in the world of statistics.

In any case, first, to establish the confidence interval function, it will be necessary to know the total sample size, the mean, the confidence level, the standard deviation, and the Alpha factor. If you have doubts, we explain these values ​​in a summarized way below.

  • Sample: the sample refers to the technique to select a number of elements typical of a population for analysis.
  • Standard / typical deviation: the standard deviation, refers to the measure that calculates the variation that exists in the numerical data.
  • Mean: the mean refers to the trend present in the statistical samples, it could be said that it is the intermediate value of all the values. Calculate the mean can be done in Excel, in case you need to set it before.
  • Confidence level: this represents the percentage in relation to the samples, more specifically of the intervals taken previously. Usually, the figures used for confidence are around 90.95 or 99%. There may well be variations, however, this condition is contemplated in a standardized way.
  • Alpha Factor: It is also known as the level of significance and is usually represented by the symbol α (Alpha). It refers to the testing of an established hypothesis and is necessary to define the confidence interval.
How to use the INTERVAL.TRUST.NORM function in Excel

Using the INTERVAL.TRUST.NORM function in Excel

  • To use the function within Excel, simply type the symbol “=” and proceed to type “INTERVAL.TRUST.NORM”.
  • The first thing that we must include within the function is the Alpha argument, to do this simply select said argument within its table. Immediately afterward you must select the standard deviation, then the total sample size will go.
  • With the above values, the specified percentage confidence interval can be determined by using Excel. It is clearly one of those functions of specific use, but if you find it necessary to analyze the confidence values ​​of a population sample, it can be useful.

In turn, it is always recommended to create a pivot table with dynamic range in Excel, since a large amount of data can be properly organized in this way. The truth is that statistical tables are usually complex and it is worth opting for an improved organization.

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How to use Excel function FALSE and EXP correctly – Very easy

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How to use Excel function FALSE and EXP correctly - Very easy

Nowadays it is very common to use different functions in different programs to facilitate the calculations that at a certain moment could take place at work, or in any other activity that is developed. Such is the case of Office Excel or iWork, which offers you various features to perform complex and repetitive calculations.

In this post, we will be talking about how to use the Excel function correctly FALSE and EXP in a simple way, in addition, we will talk about the applications that you can give to them, so you can carry out work with these functions.

What are FALSE and EXP functions for Excel?

Before starting with the syntax and examples of the use of these formulas, you must have previous knowledge of the use of Excel. In this sense, you will see that the FALSE and EXP functions will help you solve various aspects related to logical and mathematical problems. The first one, that is, the FALSE formula will return a logical expression that represents the same word.

How to use Excel function FALSE and EXP correctly - Very easy

This function does not require arguments, and it will be useful to logically fix situations that do not represent reality. For example, you put False to the expression “Frogs have 8 legs”, you know that it is not possible for frogs to have 8 legs, hence it makes sense to put the word false to said expression.

On the other hand, you will have the EXP function that will be very useful to solve expressions based on the constant number 2.71828182845904, which is the base of the natural logarithm.

Well yes, you will see that it is related to the mathematical expressions that are handled in studies at various levels. You can even make use of them to determine the behavior of process control curves in the industry, analyze the value of money over time, and other elements of various natures.

As an alternative to using the EXP formula in Excel, you will have the EXP.NDIST function, which will provide you with more complete tools to perform statistical analysis on a set of data. In general, these formulas will be very helpful for you in handling Excel.

Using the FALSE and EXP functions in Excel

As previously pointed out, the FALSE function does not require any type of data to function properly, however, you must place it correctly so that it does not throw an Error, because although it does not need an argument, Excel requires that you place the word FALSE (). As you can see, the inside of the parentheses is left empty, where the cell or the data value is usually placed in the formula.

On the other hand, you will have the possibility of complementing your logical expressions with the use of the TRUE function, since, as its name indicates, this expression determines or represents the reality of an expression. In this sense, you will have a complete tool that will allow you to logically determine the state of a real situation.

In the case of the EXP function, you will need to put data inside the parentheses, because unlike the FALSE formula, this function analyzes the data to deliver a number by multiplying the base (2.71828182845904) by itself the number of times indicated in the argument:

  • EXP function requires argument and is written EXP (Number)
  • Keep in mind that an expected expression is a number because if you type any expression other than a number, you will get an error as a result.

There are many examples of the use of the EXP formula, however, in this post, we address the most common way to perform the calculation, without neglecting the view that you can use it to determine values ​​in curves or behavior graphs of certain natural phenomena, industrial and of various kinds. So you can place for example:

  • EXP (1) and you will have as a result the real number 2.71828182845904
  • EXP (2) and the result you will get will be 7.38905609
  • So you can obtain different values ​​according to your needs, below we show you a graph with an example

Finally, if you require more information about Excel functions, you can visit Microsoft’s support page to obtain the information you need and thus complement your knowledge in the use of Excel functions.

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How to convert a binary number to hexadecimal in Excel with the HEX.A.DEC function

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How to convert a binary number to hexadecimal in Excel with the HEX.A.DEC function

Communication between human beings is based on the exchange of opinions, cultures, and other relevant aspects, many of these elements are exchanged through tools and codes developed in standardized languages.

That is, means are used that allow the messages to be transmitted to be understood through codes. In this sense, the numbering systems arise that are the fundamental basis for the calculation and representation of many functional schemes.

Among the numbering systems, you have the binary system that is the basis of machine language, as well as the hexadecimal variant that is a simpler representation of the previous system. In general, it will be very useful to know the definition and base of binary numbers, with which you will get to properly handle the criteria to transform or convert binary numbers to hexadecimal in Excel.

Calculation basis to transform a binary number to hexadecimal

Before starting a representation for the transformation of a binary number to hexadecimal, it will be very useful to show the difference between both numbering systems, with which you will be clear about the results that you will obtain once you apply the formula in Excel:

1. Binary numbering system

It is a numerical representation that bases its calculation on two possibilities, that is, the word binary derives from two possible results, which you can obtain as “0” and “1”. As we named you before, binary numbers are the basis of machine language, so names and everything we write on a PC or any device are based on these numbers.

How to convert a binary number to hexadecimal in Excel with the HEX.A.DEC function

With this language, you can even write your name. On the other hand, the representation of these numbers to obtain binary from a decimal is enough to divide by 2 until obtaining the number “0” or “1”

For example, the 14 in decimal to make it binary, we must divide by 2 consecutively to obtain the relationship, thus dividing 14 by 2, the quotient is 7 and the remainder is 0, then we divide 7 by 2, the quotient is 3 and The remainder is 1, 3 is divided by 2, the quotient is 1 and the remainder is 1. The binary number will be 1110 which is the equivalent of 14 in decimal.

2. Hexadecimal numbering system

Like the binary to obtain hexadecimal, the decimal number must be divided, but instead of 2 as the basis of the calculation, the number 16 is used, therefore the representation changes and a hexadecimal number can take any value up to 15. However, in this case, the number 10 is the letter A, the 11 is the B, the 12 is the C, and so on until the 15 is the letter F.

To obtain the hexadecimal number of a decimal, just divide a number greater than 16 by 16, so you will get the equivalence you need. However, this post is oriented to show how to obtain hexadecimal from a binary. To do this you must take 4 consecutive binary numbers to obtain the hexadecimal representation.

For example, the decimal number 18 in binary would be 10010, now in the case of that same decimal to a hexadecimal number, we divide by 16 and we get 12, but as we will do from binary to hexadecimal, we take 4 binary numbers from right to left and we see its equivalent in hexadecimal. Thus we will have 0010, which is the number 2 in hexadecimal, leaving only 1 in binary in the first position that represents the number 1 in hexadecimal.

How to use the function to convert binary to hexadecimal in Excel
Before using Excel to calculate any element, it will be necessary for you to know how to use the formulas in Excel, so you must know the syntax to properly write the function and in this way obtain a positive and satisfactory result.

  • The HEX.A.DEC function will help you to know the decimal value of a number that is represented in Hexadecimal
  • You must enter the number in hexadecimal format HEX.A.DEC (number)
  • It will return the equivalent to decimal

On the other hand, to transform from binary to hexadecimal you must use BIN.A.HEX, you only have to enter the binary number and it will return the hexadecimal. see Microsoft support for more information.

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