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Hi
I am confused over one question on gross profit margin, what can I include in cost out of the list to calculate gross profit margin? (not operating profit) .
Jet fuel
Employee
Aircraft operating leases
Sales and marketing
Depreciation
Handling
In-flight catering and related costs
Overflying
Aircraft maintenance
Office accommodation and IT costs
Landing and parking
Cost of goods sold
AmortisationThanks
Gross margin = sales less cost of sales (direct cost of sale). I don not what is the business and sale but I am quessing is air line, so sales are flights, direct cost – jet fuel, employee-only crew in the airplain, in flight catering. I am not sure about handling, oveflying, landing and parking – don’t know what these are. If they relate directly to the flight should be deducted.
For sure not leases, sales and marketing, depreciation, aircraft maintenance, office accomodation, cost of goods sold(if not relating to goods offered for sale on the plane), amortisation
Thanks, you have made my problem solved. You are right it is airline industry and I as doing it for Emirates Airline.
Regards
SanaI would have thought that the costs involved in arriving at cost of sales should be those which are directly attributable to the running of the airline and are direct costs of keeping the planes in a fit condition to keep the revenues being generated.
That would seem to preclude “office accommodation and IT costs” as well as “sales and marketing” costs.
With reference to depreciation it depends what assets you are depreciating. Amortisation – I cannot imagine what the intangible asset is which could be being amortised and which is a direct cost of running the airline – but I have no doubt someone will clue me in
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