Learning management system

A learning management system (LMS) is a software application for the administration, documentation, tracking, reporting, automation and delivery of educational courses, training programs, or learning and development programs.[1] The learning management system concept emerged directly from e-Learning. Although the first LMS appeared in the higher education sector, the majority of the LMSs today focus on the corporate market. Learning Management Systems make up the largest segment of the learning system market. The first introduction of the LMS was in the late 1990s.[2]

Learning management systems were designed to identify training and learning gaps, utilizing analytical data and reporting. LMSs are focused on online learning delivery but support a range of uses, acting as a platform for online content, including courses, both asynchronous based and synchronous based. An LMS may offer classroom management for instructor-led training or a flipped classroom, used in higher education, but not in the corporate space. Modern LMSs include intelligent algorithms to make automated recommendations for courses based on a user’s skill profile as well as extract meta-data from learning materials in order to make such recommendations even more accurate.

Purpose

An LMS delivers and manages all types of content, including video, courses, and documents. In the education and higher education markets, an LMS will include a variety of functionality that is similar to corporate but will have features such as rubrics, teacher and instructor facilitated learning, a discussion board, and often the use of a syllabus. A syllabus is rarely a feature in the corporate LMS, although courses may start with heading-level index to give learners an overview of topics covered.

History

There are several historical phases of distance education that preceded the development of the LMS:

Correspondence teaching

The first known document of correspondence teaching dates back to 1723, through the advertisement in the Boston Gazette of Caleb Phillips, professor of shorthand, offering teaching materials and tutorials.[3] The first testimony of a bi-directional communication organized correspondence course comes from England, in 1840, when Isaac Pitman initiated a shorthand course, wherein he sent a passage of the Bible to students, who would send it back in full transcription. The success of the course resulted in the foundation of the phonographic correspondence society in 1843. The pioneering milestone in distance language teaching was in 1856 by Charles Toussaint and Gustav Langenscheidt, who began the first European institution of distance learning. This is the first known instance of the use of materials for independent language study.[4]

Multimedia teaching: The emergence and development of the distance learning idea

The concept of e-learning began developing in the early 20th century, marked by the appearance of audio-video communication systems used for remote teaching.[5] In 1909, E.M. Forster published his story ‘The Machine Stops’ and explained the benefits of using audio communication to deliver lectures to remote audiences.[6]

In 1920, Sidney L. Pressey developed the first teaching machine which offered multiple types of practical exercises and question formats. Nine years later, University of Alberta’s Professor M.E. Zerte transformed this machine into a problem cylinder able to compare problems and solutions.[7]

This, in a sense was “multimedia”, because it made use of several media to reach students and provide instruction. Later printed materials would be joined by telephone, radio and TV broadcasts, audio and videotapes.[8]

The earliest networked learning system was the Plato Learning Management system (PLM) developed in the 1970s by Control Data Corporation.

Telematic Teaching

In the 1980s the modern telecommunications start to be used in education, with computers more present in the daily use of higher education institutions. Computer aided teaching aims to integrate technical and educational means and instruments to student learning. The trend then shifted to video communication, as a result of which Houston University decided to hold telecast classes to their students for approximately 13–15 hours a week. The classes took place in 1953, while in 1956, Robin McKinnon Wood and Gordon Pask released the first adaptive teaching system for corporate environments SAKI.[9] The idea of automating teaching operations also inspired the University of Illinois experts to develop their Programmed Logic for Automated Teaching Operations (PLATO) which enabled users to exchange content regardless of their location.[9] In the period between 1970 and 1980, educational venues were rapidly considering the idea of computerizing courses, including the Western Behavioral Sciences Institute from California that introduced the first accredited online-taught degree.

Teaching through the internet: The appearance of the first LMS

The history of the application of computers to education is filled with broadly descriptive terms such as computer-managed instruction (CMI), and integrated learning systems (ILS), computer-based instruction (CBI), computer-assisted instruction (CAI), and computer-assisted learning (CAL). These terms describe drill-and-practice programs, more sophisticated tutorials, and more individualized instruction, respectively.[10] The term is currently used to describe a number of different educational computer applications.[11] FirstClass by SoftArc, used by the United Kingdom’s Open University in the 1990s and 2000s to deliver online learning across Europe, was one of the earliest internet-based LMSs.[12][13]

The first fully-featured Learning Management System (LMS) was called EKKO, developed and released by Norway’s NKI Distance Education Network in 1991.[14] Three years later, New Brunswick’s NB Learning Network presented a similar system designed for DOS-based teaching, and devoted exclusively to business learners.

Technical aspects

Most modern LMSs are web-based. There are a variety of integration strategies for embedding content into LMSs, including AICC, xAPI (also called ‘Tin Can’), SCORM (Sharable Content Object Reference Model)[15] and LTI (Learning Tools Interoperability). LMSs were originally designed to be locally hosted on-premise, where the organization purchases a license to a version of the software, and installs it on their own servers and network. Many LMSs are now offered as SaaS (software as a service), with hosting provided by the vendors.[16]

Through LMS, teachers may create and integrate course materials, articulate learning goals, align content and assessments, track studying progress, and create customized tests for students. LMS allows the communication of learning objectives, and organize learning timelines. LMS leverage is that it delivers learning content and tools straight to learners, and it can also reach marginalized groups through special settings. Such systems have built-in customizable features including assessment and tracking. Thus, learners can see in real time their progress and instructors can monitor and communicate the effectiveness of learning.[17][18] One of the most important features of LMS is trying to create a streamline communication between learners and instructors. Such systems, besides facilitating online learning, tracking learning progress, providing digital learning tools, manage communication, and maybe selling content, may be used to provide different communication features.[19]

Features

Managing courses, users and roles

The LMS may be used to create professional structured course content. The teacher can add, text, images, tables, links and text formatting, interactive tests, slideshows etc. Moreover, you can create different types of users, such as teachers, students, parents, visitors and editors (hierarchies). It helps control which content a student can access, track studying progress and engage student with contact tools. Teachers can manage courses and modules, enroll students or set up self-enrollment, see reports on students and import students to their online classes.[20]

With much of the integration of new resources being controlled by technical guidelines outlined by SCORM (Sharable Content Object Reference Model), the process of integrating new features within multiple LMSs has become more efficient.

Online assessment and tracking students’ attendance

LMS can enable teachers to create customized tests for students, accessible and submitted online. Platforms allow different multiple question types such as: one/multi-line answer; multiple choice answer; drag-and-drop order; essay; true or false/yes or no; fill in the gaps; agreement scale and offline tasks. Some LMSs also allow for attendance management and integration with classroom training wherein administrators can view attendance and records of whether a learner attended, arrived late, or missed classes and events.[17]

User feedback

Students’ exchange of feedback both with teachers and their peers is possible through LMS. Teachers may create discussion groups to allow students feedback and increase the interaction in course. Students’ feedback is an instrument which help teachers to improve their work, identify what to add or remove from their courses, where students feel more comfortable, what makes them be more included.[2]

What is an LMS, and What Can LMS Do for Your Business?

Michael got a new achievement called “The Ambassador.” Now, he’s number fifteen in the overall ratings. But what’s even more important, he’s one rank higher than his colleague George from Miami (they’ve been competing for a while). No, they aren’t playing World of Warcraft. In fact, Michael is a manager at a supermarket which is a part of a well-known retail chain. He got the achievement for completing the e-course “The Standards of Service.”

You can launch your own online learning resource and implement the same gaming principles using a learning management system, or LMS. In this article, we’re going to tell you what it is and how it can help you.

What’s an LMS?

An LMS is a platform for digital learning. Its key features can be found in the abbreviation.

L — Learning. With an LMS, you can create a single source of online courses and training materials. This will become a unique source of knowledge in your area, so that you can keep and increase the in-house expertise of your company.

M — Management. You can manage courses and learners, and even improve your own efficiency.

Unlike file sharing services, an LMS is not just a heap of files; on the contrary, it’s a well-organized system where you manage the training process. To start training, simply add employees and assign courses.

Have you recently hired some new employees? Send them invitations to the onboarding training course. Experiencing low sales? Ask your salespeople to practice with virtual clients.

Thanks to features like a calendar, you’ll be able to assign and manage not only online training, but also in-class sessions. In this way, an LMS can be a sort of a to-do app designed specially for eLearners.

S — System. Computer system, to be exact. An LMS automates the most boring and tedious work such as grading, processing statistics, and preparing reports. Plus, you can train your employees without leaving the office, managing all the processes right from your work computer.

In other words, an LMS is like your own online university. The system allows you to store and create eLearning courses, provides learners access to the content, and helps you evaluate the results.

Watch the video to see how an LMS works and how it can help your business grow.

What Type of LMS Should I Choose?

Now that you know what an LMS is, it’s time to figure out which learning platforms exist and how they differ. Here’s a description of different types of LMSs:

Corporate vs. Academic LMS

Both corporate and academic LMSs give access to learning materials online and automate different aspects of training processes, but they have some differences.

Learning goals

Academic learning is aimed at producing good students that have deep knowledge of the subjects and strive to learn more. Here, theoretical knowledge is the end goal. Corporate training focuses on learning related to practical applications, and one of its main objectives is ROI.

Course timeline

For workforce training, time limits are shorter, so a corporate LMS must be flexible to fit all time frames and business needs. Semesters, trimesters and quarters — these are the time frames for educational institutions. For them, the LMS should offer such scheduling units as holidays, exam times, and periods.

Certifications vs. grades

A corporate learning platform usually offers the capability of tracking and completion in the form of certifications. An academic LMS typically tracks learners’ progress through its grading system. It provides gradebooks for monitoring attendance and assignment results, as well as keeping other information for each student in the roster.

Tools for social learning

Other functionalities that an academic learning platform usually provides are capabilities for creating student groups for class projects and breakout sessions, discussion boards, and a built-in web-conferencing tool.

Content updates

The content students require is based on the sciences and humanities; that’s why an educational LMS doesn’t need to update it regularly. Since market needs change quite rapidly, a corporate LMS should have the ability to quickly and easily update courses.

Free vs. Commercial

This is usually one of the first challenges companies face when choosing an LMS: deciding between a free, open-source system, or a commercial platform. In fact, there’s a major misconception that all open-source LMSs are free. There may be no license fee, but that doesn’t mean there are no costs. You are likely to spend more on your open-source platform than a commercial LMS, as you may need to set up a server and a hosting architecture, customize LMS features that come standard, fine-tune the site branding, and regularly upgrade your system. Plus, if you don’t have technical talent in your team who can make it highly customizable for your company, your eLearning project is likely to fail.

The ideal solution for users without an IT background is commercial software. It’s typically much easier to deploy and use, offers tech support services, and doesn’t require additional costs.

SaaS / Cloud LMS vsLocally hosted LMS

You can choose a SaaS (Software as a Service) LMS or store the data on your company’s own servers. If you decide to host the system yourself, you’re fully responsible for all server specs, uptime and security.

If you select a SaaS system, it will be your LMS vendor who takes care of server load, backups, and all the other things concerning storing your training data. This is the best match if you don’t have IT staff in place that can manage the system and handle support, customization and scalability concerns. Instead of spending time on managing the LMS, you can focus on creating learning content.

Some companies avoid cloud-based LMSs because of data security concerns. They believe that their information that is stored on a remote server may be compromised. However, there are different ways to safeguard your data. For instance, ensure that the LMS vendor has effective encryption protocols and will back up your information.

Course-creating (LCMS) vs. Non-course-creating (LMS)

To be more precise, an LMS (learning management system) is a tool that allows you to simply distribute ready-made content. And a system that, beyond this, has functionality for creating courses, is called an LCMS (learning content management system).

There’s a tricky balance between these systems. An LCMS has greater capabilities for building and managing eLearning content, while an LMS focuses on user management and provides a wider range of learning experiences. For example, it lets you manage more traditional forms of learning, such as scheduling face-to-face training.

If you’re going to build courses in-house, you can choose between two alternatives: either buy an LCMS, or purchase an LMS and an authoring tool separately.

However, here you can face two problems:

Built-in course editors usually have serious functional limitations, so you will be able to create only simple courses or tests.

Not all LMSs and authoring tools are fully compatible. For instance, there may be difficulties with uploading courses to the system or tracking learners’ progress.

If you want to avoid compatibility problems and create beautiful interactive courses, choose an LMS with a bundled authoring tool. For example, iSpring Learn LMS is fully integrated with iSpring Suite. This integration allows you to create professional-looking e-courses, easily upload them to the platform, and enjoy advanced reporting capabilities.

Pros and Cons of Articulate Rise For eLearning

is a modern, dynamic eLearning authoring tool allowing designers to create responsive courses for any device. Using a web-based course builder, Rise allows instructional designers to create beautiful online courses with a few clicks of a button.

Over the past few years at Water Bear Learning, we’ve experienced a significant increase in clients appreciation and request for courses in Rise format. If you’ve developed courses in traditional eLearning authoring tools, such as Storyline or Captivate, you’ll find Rise can serve as a refreshing alternative.

While Rise certainly doesn’t have all of the customization features of traditional eLearning authoring tools, it’s responsiveness and elegant design have the power to wow many clients.

As with any new eLearning software entering the arena, there are always bound to be pros and cons. To determine if Articulate Rise 360 is the correct choice for your next eLearning project, check out our list of pros and cons to consider:

Jump to a section

What is Articulate Rise 360?

Video – Pros and Cons of Articulate Rise 360

Pros of Articulate Rise

Cons of Articulate Rise

Is Articulate Rise Worth It?

Articulate Rise Example Course

Frequently Asked Questions

Pros of Articulate Rise 360

+ 100% Browser-based tool: One of the major downsides of traditional eLearning tool, Storyline, is that it is only available for PC. As a Mac user, a major plus of Articulate Rise is that the tool is available from any web-based browser (we suggest Chrome). That means no downloading software. No installing software. The entire course-building process is completed in the browser itself, regardless if you’re using a Mac or PC. Very useful!

+ Drag-and-drop builder: The building tool within Rise is by far the simplest and most efficient tool for creating eLearning courses. Containing a simple yet powerful “block” builder, Rise provides an intuitive user interface that only requires a minimal learning curve. With the click of a button, you can duplicate modules, add interactive features, and move items up or down.

+ Elegant style: Simply said, Rise courses are visually stunning. With minimal effort, instructional designers can create courses with the look and feel of a dynamic, upscale website. The left-side navigation toolbar is perfectly placed for the learner to monitor course progress. Even if visual design isn’t your strong suit, Articulate Rise makes you look like a pro.

+ Faster development speed: The time it takes to develop an eLearning course depends on many factors. But when all is equal, placed head-to-head with traditional eLearning authoring tools, Rise requires significantly less time investment to create a course. This is due to the real-time editing ability, simplicity of the course builder, and in general, a more “cookie-cutter” supply of tools within Articulate Rise. For courses that may take two to three weeks to develop in Storyline, could most likely be developed in around one week with Rise.

+ Responsiveness: These courses really do look beautiful on any device. With recent trends toward mobile and point-of-need learning, Rise courses offer the ultimate eLearning solution. Responsiveness is clearly one of Rise’s core selling points, and for good reason, as there are very few competitors that do this as well as they do.

+ Learner navigation: Along with visual beauty, Rise courses are also incredibly straightforward for any learner to navigate. Regardless of age or technological background, Rise courses are built with simplicity and a modern flow that spans across a multitude of learning audiences.

+ Decent selection of tools: Text, video, interactive graphics, multiple choice questions. In general, Rise has a decent selection of tools to enhance the learning experience. While certainly lagging behind the nearly unlimited features of traditional eLearning tools, Rise still packs enough options to build powerful courses.

+ Easy review cycle: When working with a client, instructional designers need simple solutions for sharing work. Articulate Rise has a brilliant feature to easily share courses with a link. Simply click the ‘Share’ button at the top and a shareable link is automatically populated. Clients love the simplicity!

+ Compliance: Will this integrate with my LMS? Always a valid question to consider before choosing a new eLearning tool. Articulate Rise has all of the same export technical standards of Storyline, including SCORM 1.2, SCORM 2004, AICC, and xAPI (Tin Can).

Cons of Articulate Rise 360

– Limited customization: While the platform does have a reasonable list of features and module options, it severely lacks in customization. You may find that your text is misaligned from module to module. Unfortunately, that cannot be changed. You may also want to create a more situational eLearning course with different triggers. Unfortunately, you can’t do that either. Since the software is still new, we will cut Articulate some slack. But if they want to continue being the leader in eLearning software, we’ll need to see more customization features in the future.

– Limited evaluation options: Evaluation is an essential component to any eLearning program. While Rise does have a few options such as multiple choice questions or matching games, overall the platform is extremely limited when it comes to evaluation. The multiple choice questions are only available as single, individual questions. This means you are not able to create a 10-question graded quiz at the end of your lesson. A simple feature that we hope to see added in future updates.

– No version saving: Rise automatically saves your work every few seconds. For the most part, this is a positive. The challenge arises when you want to revert your course to a prior version. Currently, Rise does not have a versioning feature built in. Plus, depending on your browser, it’s even a struggle to do a simple Command + Z to undo your changes. A major issue if you accidentally delete a long string of text.

– No feedback or commenting option: One reason Google Docs has gained so much popularity is the ease of collaboration and receiving feedback. Teams can easily comment on documents to share their feedback. Currently, Articulate Rise does not have such a feature. This makes gathering client feedback much more cumbersome, especially if you are working remote. We hope Articulate can include a better solution for client feedback in the upcoming versions.

– High cost: As of writing, Rise comes only as part of the 360 suite, and costs over $1000/year for a single user. The difficulty here is that a full annual subscription is the only option for payment. You can’t pay month by month. With a relatively high price tag compared to competitors, it’s quite a hefty investment for many independent instructional designers looking to get started.

Is Articulate Rise Worth It?

Overall, we love using Articulate Rise to develop eLearning courses.

It’s sleek design and simple user-interface is unrivaled by any other eLearning programs on the market. And while Rise is still relatively new, we’re confident that future software updates will resolve many of the cons we’ve discussed above.

If you’re serious about instructional design and developing powerful and modern eLearning courses, Articulate Rise 360 is worth the higher cash investment.

Rise 360 Example Course

At Water Bear Learning, we use Rise 360 to design and develop many eLearning courses. This example was a creative training solution to help employees learn a new end-to-end supply chain process.

We partnered with over 15 SME’s to create a suite of 12 blended, accessible, and scalable courses. The courses featured branded visuals and Vyond animation videos packaged into a Rise 360 course.

>>> View the example Rise 360 course here

Frequently Asked Questions

What is the difference between Rise 360 and Storyline 360?

Both programs are rapid eLearning authoring tools. The difference is in the format, customization level, and software limitations.

Rise 360 is a fully-browser based eLearning authoring tool. It requires no software download to run. The platform operates similar to a website builder, where there are drag-and-drop modules that the designer can create mobile-friendly eLearning courses. Many of the courses are text-heavy as they are built to read like a website.

Storyline 360 is Articulate’s original rapid eLearning tool. It requires a software download and can only be operated on Windows OS. The platform operates similar to Microsoft Powerpoint, where slides are created often with a narrated voiceover and animated scenes. Storyline is one of the most popular eLearning authoring tools available. It allows designers flexibility to create simple courses or use code to fully customize an experience.

How do you use Articulate Rise 360?

Articulate Rise is built to be very user-friendly with a soft learning curve. You can start a free trial of Articulate Rise and play with some of the drag-and-drop features yourself. Or you can check out this E-Learning Heroes Rise 360 User Guide. It provides an in-depth overview of how to use Rise 360 from course management all the way to publishing.

How much does Articulate 360 cost?

As of writing, the annual subscription rate for Articulate 360 is $999 for a single user. This license includes access to the full suite of Articulate tools: Storyline 360, Rise 360, Review 360 and few other supportive apps.

Calculate Gross Profit (formulas and definitions)

As a small business owner, you have a responsibility to keep guiding your business towards profitability. That’s not always an easy thing to do especially if your business is still in its infancy. The question is, “how do you know if you are running a profitable business or at least have your business headed in the right direction?” The term “information is king” comes to mind. You need the right information to tell you how your business is doing at all times. Yes, getting the information you need involves a lot more than looking to see how much cash is in your company’s bank account. That’s not always an accurate sign of profitability. The best information you can find is the information your accountant or accounting department can provide for you. Even a small set of financial statements can tell you an important story about your business. The problem is you need to understand that upon which you should be relying. To that end, we would like to focus the following discussion on one very important financial concept, how to calculate gross profit.

What is Gross Profit?

Business owners who are unfamiliar with accounting practices and interpreting financial statements will tend to focus on one number, net profit. If there is a net profit, it’s no doubt an important number. However, it’s not always the best indication of how a business is really doing. The best indication of how a business is doing comes from the company’s gross profit numbers. Let’s start this discussion with a definition gross profit as stated by the Investopedia website: “Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. Gross profit will appear on a company’s income statement and can be calculated by subtracting the cost of goods sold (COGS) from revenue (sales). These figures can be found on a company’s income statement.” In laymen terms, gross profit is the difference between what a company earns from the sales of its goods or services minus the costs incurred to produce or provide those goods or services. In formula format: Sales – Cost of Goods Sold = Gross Profit Example: If Company A sells 50 widgets at $10 a widget, the company’s gross revenue from sales would be $500. If it cost a total of $5 to produce or acquire each of those widgets, the total cost of the 50 widgets would be $250. Using the gross profit formula, this is how to calculate gross profit: $500 (gross revenue from sales) – $250 (Cost of Goods Sold) = $250 (Gross Profit)

Understanding Cost of Goods Sold

At this point, you might be wondering what items would typically be counted as your cost of goods sold. There are two components to this number: variable costs and fixed costs. Your variable cost is the direct cost your company incurs per unit produced or acquired. This would include direct labor cost, manufacturing materials (if applicable), and shipping costs. The fixed cost is the cost of your company incurs regardless of how many units your company produces, acquires, or sells. The long list of fixed costs includes (but is not limited to), office/factory rent, insurance, payroll taxes, commissions, benefits, and property taxes. It might also include an allocation of expenses like utilities and office supplies. What it does not include is company business income taxes, depreciation expense, and amortization.

How to Calculate Gross Profit Margin

Once you know how to calculate your gross profit, you’ll have a reasonable idea of just how well your company is doing in dollars and cents. A word of caution: this is just a number. If you want to compare the success of your business with other companies in your sector, you would want to also calculate your company’s gross profit margin. The gross profit margin formula will give you a percentage. That percentage is something you can use as the basis for comparison. This is the best way to make industry comparisons when all applicable businesses come in different sizes and shapes. Here is the gross profit margin formula: Sales RevenueCost of Goods Sold / Sales Revenue = gross profit margin Using the example from above, the formula would read as follows: $500 (Sales Revenue) – $250 (Cost of Goods Sold) / $500 (Sales Revenue) = .5 or 50% (gross profit margin). You need to understand there is a difference between gross profit margin and the net profit margin. The gross profit margin represents the percentage of how your company is performing based on its sales. The net income profit margin represents how your company is performing based on all business activities. You would expect your company’s gross profit margin to be higher than your company’s net profit margin unless your company has another meaningful source of income.

How to Use Gross Profit Margin to Make Business Decision

The accounting information you receive from your accountants is worth very little if you don’t use it to help drive your business’ activities. Everything we give to our clients has meaning. If our clients don’t understand the meaning, we are happy to help educate them. As indicated above, you can use your gross profit margin as a means of determining how your company is performing in comparison to other companies in your sector. If your industry’s standard gross profit margin is 40% and your company is running at 50% as stated above, your company is doing very well. It has a healthy profit margin. There might be enough room for your company to offer discounts, perhaps driving your sales even higher. Conversely, you need to know if your gross profit margin is running below industry standards. If the industry sits at a profit margin of say 60% and your company is running at 50% as stated above, there could be issues you might want to address. To drive your gross profit margins higher snd closer to industry standards, you can choose one of three paths. First, you might start by raising your prices a little bit. This might work as long as your prices are below the competition in the first place. If your company’s prices are already inline with the rest of the industry, you would want to look at your expenses. You would likely need to lower your company’s expenses to drive your gross profit margin higher. You can usually achieve this objective by lowering your company’s overhead expenses or renegotiating contracts with your vendors/supplies. In some cases, you might want to consider using both of the aforementioned options. If you increase your sales prices while remaining competitive, you can then target cost savings to drive your company’s gross profit margin closer to where you want it to be. We hope we have served you well with this little tutorial on how to find gross profit and how you can use this key number to manage your business. It’s our hope this newfound understanding will motivate you to learn more about interpreting the financial information that comes from your accountant or account department. If we can be of more service, we hope you will contact us at your earliest convenience.

FAQ

What does a low gross profit percentage mean?

It means that the company’s profit is not enough to keep costing the product or service that it sells in order to keep growing. Nevertheless, that depends on the type of company it is, there can be difficult times for big companies that can suffer a low gross profit margin percentage having to fix prices and become more efficient in producing and selling the products to increase the operating profit. In contrast, the small companies do not usually have a higher profit margin at the beginning, needing to improve the company’s marketing, generating more customers, and having better management of the cash flow. This will improve the gross profit ratio. Otherwise, these small businesses can go bankrupt by not achieving a higher operating profit margin

What is a 50% profit margin

A 50% profit margin is a margin that generates over the income needed to cover the cost of their sale product with a profit of 50% of the sale. Having a 50% profit margin is positive but will always depend on the company and the industry. Having a 50% profit margin is positive but will always depend on the company and the industry. In the market, there are obstacles that can affect the profit margin and it is possible to lose customers. Therefore, It is necessary to adjust the selling price by giving offers and discounts in order to sell. These offers can affect the profit margin if it does not sell a lot, but in case it sells a lot thanks to these offers it will not be negative even if it does not have exactly 50% of the profit. To finish, another point to consider is the average gross profit margin of the industry where a company is located, if the gross profit margin of a company is below the gross profit margin of the industry then it is not positive, the gross margin always needs to be higher or equal.  

Why do you need to calculate your gross profit?

The first step is to have all the business information at hand, no matter if a business is just starting or has been going on for decades, we must always know all the data and information that the company handles. This includes the total revenue, total sales, production cost, direct cost, labor cost, direct expenses, and many more that are necessary for the profit margin calculation. And here is why you need it because when calculating a good profit margin we know how the business is doing if it is in good condition or not to follow and improve in every aspect.

How to calculate a profit margin in excel?

There are many ways to calculate the profit margin, many websites offer free services to calculate the profit margin. However, in case the internet is not present, Excel is the most recommended option to calculate the profit margin. Excel is widely used by accounters as it has ready-made templates that help them to calculate statements. In the case of calculating the net margin in Excel, you have to get the total variable costs and the total variable income on hand, then open an Excel sheet, create a table with the columns income, costs, gross profit or gross margin. Then, after having structured the table, you have to place the figures with their respective cells, subtract the cost of goods manufactured from the revenue and enter the respective formula with the operating expense.

Copyright © 2020 by onlinecarinsurancefreequotes.net - All rights reserved.