Accountancy question

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Anolphart

Anolphart

Zol Straub
Joined
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Yamba, NSW
I've never had accountancy lessons although I'm fairly familiar with profit and loss procedures, but I would like to know what an operating margin is. And would you consider 57% as being a healthy "operating margin" for a very large business?
 
My friend, a margin like that would make most business's jealous. In a nutshell, what it means is the percentage of profit measured against the income of the business.

For example: If your sales are $100,000, and ALL your expenses are $43,000, then your operating margin is $57,000. That profit of $57,000 represents a margin of 57% when measured against your gross sales.

Don't want to get too technical, so hope my example explains your question. And, once again, a margin like that creates envy.

Just for the record, I am an Accountant.

Cheers and continuing good luck.
 
Thanks guys,

I've been fighting a large corporation that wants to unfairly raise the rent of some elderly residents in an over 55 village that also caters for short term occupancy (caravan, tent, serviced units and villas) I am taking them to tribunal and when I asked them to justify their reason for this rise, they eventually produced a very vague summary of expenses which included ALL of the expenses that applied not only to the residents but to the tourist side of the business as well. Needless to say the tourist side of expenses far outweighed the residents, as all of the residents pay for their own water, electricity and gas and are not serviced at all by the business.

Anyway, like I said, I'm confident of a favourable result when it goes to arbitration in a few weeks time, but I was reading the business owners' 2017 annual report and saw the 57% operating margin and just wanted clarification. I didn't want to sound like a goose at the hearing.

So thanks again fellas.
 
Phoenix76 said:
My friend, a margin like that would make most business's jealous. In a nutshell, what it means is the percentage of profit measured against the income of the business.

For example: If your sales are $100,000, and ALL your expenses are $43,000, then your operating margin is $57,000. That profit of $57,000 represents a margin of 57% when measured against your gross sales.

Don't want to get too technical, so hope my example explains your question. And, once again, a margin like that creates envy.

Just for the record, I am an Accountant.

Cheers and continuing good luck.
Click to expand...

Phoenix what are your thoughts about selling gold if you dont mind , will i pay tax from selling gold nuggets 15 - 20 onces to a refinery ,,

lot of different thoughts on this subject ..

wayne,
 
waynec said:
Phoenix76 said:
My friend, a margin like that would make most business's jealous. In a nutshell, what it means is the percentage of profit measured against the income of the business.

For example: If your sales are $100,000, and ALL your expenses are $43,000, then your operating margin is $57,000. That profit of $57,000 represents a margin of 57% when measured against your gross sales.

Don't want to get too technical, so hope my example explains your question. And, once again, a margin like that creates envy.

Just for the record, I am an Accountant.

Cheers and continuing good luck.
Click to expand...

Phoenix what are your thoughts about selling gold if you dont mind , will i pay tax from selling gold nuggets 15 - 20 onces to a refinery ,,

lot of different thoughts on this subject ..

wayne,
Click to expand...

wayne, prospecting as we do is classed as a hobby and not taxable. If it is to be added to your annual income then you will be able to claim your expenses associated with it, fuel, travel, depreciation and repairs on equipment, protective clothing etc. Most of us would definitely run at a loss.
 
Wayne, Without admitting any wrong doing (I have not sold any of the little gold I have found)

As Money box stated above, however;

If you are a pensioner and you own gold, it is an asset to Centrelink (If you tell them)
If you then sell that gold for cash, that is also an asset (if you tell them)
If the buyer, because of the amount, pays you by cheque or bank transfer, the funds will show in your bank account. (Work out that one for yourself as your bank balances are accessible if and when gov't agencies check assets)

If you are working, the only effect on bank balances as you know, is the interest component of taxable income.:)
 
Operating Margin of 57% is extraordinary.
Are you sure it's OM and not Gross Margin.
There is a huge difference. Don't get them confused. Gross Margin is gross profit as a percentage of sales before overhead is deducted.
Operating margin is profit before interest and tax and has overhead deducted.
 
I work for a large Rail Haulage Company. Their mantra to us a few years back was "Drive to 75"

75% operating ratio. Now they are below that figure and of course, millions NPAT is never enough so more cuts to prop up CEO bonuses and share options.

Same old rheteric. We must continue to drive costs down to remain competitive in a challenging market. There are some difficult decisions to make. (Make people redundant) We expect a few headwinds in the next quarter. Ask your manager how you can help.........er.........NO....... (Get some new material for christ sakes)

Like the banks, why make 3 billion when you can charge dead people and make 4 billion profit.

Where profit is involved........people come last! (Read that somewhere and loved it)

Good Luck

RS
 
Waynec

The answer to your question given by Moneybox is spot on. And the main reason it is classed as a hobby is the amount you are earning and the high probability that if you started deducting your expenses you would make a loss. If you added all that to your normal income it would reduce you tax liability and the tax dept doesn't like those situations.

Cheers
 
OK Thanks for the info Guys just hope the TAX man dont get any of my hard earned !!
 
LOL No - some were answering a question asked on post #7 or adding further to those answers (posts # 9 & #14).
Sorry for getting off topic Anolphart. :beer:
 
No problems about getting off topic. My question was answered earlier. And yes Dignit, I took that info off their published annual report. I reckon the reason that their operating margin is so high is because they've been ripping the residents off for all these years. I'm asking the tribunal to give the organisation a directive to not only reduce the rent, but to reimburse what they took illegally. At first rough count that's at least over a million bucks.I suspect that if I want to recoup that money I'll have to take out a civil action against them.
 

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