Can sales be higher than earnings?
2006-07-06 05:36:54 · 8 answers · asked by Yardbird 5 in Business & Finance ➔ Investing
For example Wild Oats has a high P/E but a low P/S. How is that possible?
2006-07-06 05:38:04 · update #1
So, if Wild Oats has a high P/E and a low P/S, that means that it generates a lot of sales but a small profit on those sales. Is that right?
2006-07-06 06:07:21 · update #2
Yeah, check out Ford and GM.
Sales are great...but they are making practically nothing on each car they sell and earnings SUCK.
Lets say it costs me $2 to make something. I sell 100 of them for $3. My sales are $300, my earnings are $100. Earnings are 33.3% of sales.
Now lets say I sell 100 of them for $2.10. Now my sales are $210 and my earnings are $10. Earnings are 5% of sales.
In the second case sales are WAY higher than earnings.....
2006-07-06 06:10:49 · answer #1 · answered by Anonymous · 3⤊ 0⤋
Sales MUST be higher than earnings. Earnings = Sales - Cost of goods sold - Sales, general & administrative expenses - Interest - Income taxes.
2006-07-06 05:40:37 · answer #2 · answered by NC 7 · 0⤊ 0⤋
I'm honestly not 100% about this but I think this is right...sales is the total amount sold, while earnings just describes profit margins. So earnings is total sales minus expenses.
2006-07-06 05:40:57 · answer #3 · answered by Jeremy G 2 · 0⤊ 0⤋
Sales is the dollars rung on the cash register,for example ,in a retail setting . Earnings is after the wages and other costs of doing business are subtracted. Earnings equals profit. This is why p/e is bigger than p/s .
2006-07-06 05:44:50 · answer #4 · answered by Chuck Nite 1 · 0⤊ 0⤋
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Gross profit is sales - COGS, so you figure out the profit after the raw goods/direct labor. Net profit takes into account a whole bunch of other factors. It's how much the company actually made and can "keep" in the form of retained earnings. -SG&A -interest expense on debt -taxes -other one-time income or expenses
2016-04-04 00:57:49 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Earnings = Sales - expenses
2006-07-06 07:17:20 · answer #6 · answered by poodog13 1 · 0⤊ 0⤋
Sales is revenue and earning is profit so lets say I have $100,000 in sales with a 10% profit margin then I'd have $10,000 in earnings. P/E is share price divided by earnings per share which is your P/S
2006-07-06 05:41:58 · answer #7 · answered by NOVA50 3 · 0⤊ 0⤋
Sales is the Total amount sold without any deductions.....Earnings is the total sold minus overhead
2006-07-06 05:39:49 · answer #8 · answered by Anonymous · 0⤊ 0⤋