Les Fleurs, Case Study Example

Net revenue is revenue, which a firm has actually received in the particular accounting period.

Net sales revenue = Sales – Sales discounts – Sales returns

Net sales revenue = €400,000 – €4,000 – €8,000 = €388,000

The total revenue of Les Fleurs, raised from selling goods equals €388,000.

Cost of goods sold is a value of all goods sold in a particular accounting period.

Cost of goods sold = Purchases + Freight costs + Inventory at the beginning of the accounting period – Inventory at the end of the accounting period – Purchase returns – Purchase discounts

Cost of goods sold = €250,000 + €8,000 + €20,000 – €30,000 – €7,000 – €3,000 = €238,000

Total sum of money, which Les Fleurs spent on inventory purchase, is €238,000

Gross profit is net value of profit raised by the company from selling goods.

Calculation of the Gross profit of Les Fleurs is performed using two values calculated above.

Gross profit = Net revenue – Cost of goods sold = €388,000 – €238,000 = €150,000

Profit of Le Fleurs from selling goods equals €150,000.

References

Gross profit. In InvestorWords.com. Retrieved July 12, 2009 from http://www.investorwords.com/2249/gross_profit.html