--- title: DO YOU UNDERSTAND YOUR BUSINESS FINANCIALS? description: Accountants use acronyms like a second language, GM, COGS, EBIT, EBITDA, NPAT, ROI, ROCE, NPV, IRR, AR, AP, WCE, DSO the list goes on and on… image: https://www.crossthet.com.au/hubfs/young-man-signs-documents-in-the-office-successful-4REUB45.jpeg --- [![Horizontal\_onWhite](https://www.crossthet.com.au/hubfs/Horizontal_onWhite.svg) ![Horizontal\_onDark-1](https://www.crossthet.com.au/hubfs/Horizontal_onDark-1.svg)](https://www.crossthet.com.au) [![Horizontal\_onWhite](https://www.crossthet.com.au/hubfs/Logo/Cross%20the%20T/Horizontal_onWhite.svg)](https://www.crossthet.com.au) - [ABOUT](https://www.crossthet.com.au/about) - [OUR STORY](https://www.crossthet.com.au/ourstory) - [WHY US](https://www.crossthet.com.au/whyus) - [OUR TEAM](https://www.crossthet.com.au/ourteam) - [SERVICES](https://www.crossthet.com.au/services) - [CIVIL CONSTRUCTION](https://www.crossthet.com.au/civilconstruction) - [BUSINESS FOUNDATIONS](https://www.crossthet.com.au/businessfoundations) - [BUSINESS SUPPORT](https://www.crossthet.com.au/businesssupport) - [PROFESSIONAL PARTNERING](https://www.crossthet.com.au/professionalpartnering) - [SPEAKING](https://www.crossthet.com.au/speaking) - [TESTIMONIALS](https://www.crossthet.com.au/testimonials) - [RESOURCES](https://www.crossthet.com.au/resources) - [CONTACT](https://www.crossthet.com.au/contact) - [ABOUT](https://www.crossthet.com.au/about) - [ABOUT](https://www.crossthet.com.au/about) - [OUR STORY](https://www.crossthet.com.au/ourstory) - [WHY US](https://www.crossthet.com.au/whyus) - [OUR TEAM](https://www.crossthet.com.au/ourteam) - [SERVICES](https://www.crossthet.com.au/services) - [SERVICES](https://www.crossthet.com.au/services) - [CIVIL CONSTRUCTION](https://www.crossthet.com.au/civilconstruction) - [BUSINESS FOUNDATIONS](https://www.crossthet.com.au/businessfoundations) - [BUSINESS SUPPORT](https://www.crossthet.com.au/businesssupport) - [PROFESSIONAL PARTNERING](https://www.crossthet.com.au/professionalpartnering) - [SPEAKING](https://www.crossthet.com.au/speaking) - [TESTIMONIALS](https://www.crossthet.com.au/testimonials) - [RESOURCES](https://www.crossthet.com.au/resources) - [CONTACT](https://www.crossthet.com.au/contact) [FREE CONSULTATION](https://www.crossthet.com.au/consultation) # DO YOU UNDERSTAND YOUR BUSINESS FINANCIALS? ![young-man-signs-documents-in-the-office-successful-4REUB45](https://www.crossthet.com.au/hs-fs/hubfs/young-man-signs-documents-in-the-office-successful-4REUB45.jpeg?width=500&name=young-man-signs-documents-in-the-office-successful-4REUB45.jpeg) Accountants use acronyms like a second language, GM, COGS, EBIT, EBITDA, NPAT, ROI, ROCE, NPV, IRR, AR, AP, WCE, DSO the list goes on and on… Over time a large amount of accounting and financial acronyms have become part of the business community vernacular which is great for communicating and understanding your business, but which may seem like a foreign language at first! Here are a couple of the profitability acronyms to help your understanding: - GSV is the full price of the goods or services you sold, also known as Gross Sales Value. - Disc. is the discount or rebate that you need to provide to secure the sale, this is often viewed as a cost of doing the business. - NSV is the Net Sales Value and is equal to the GSV less the Disc. you provide to secure the sale. - COGS are the Cost Of the Goods Sold, for a manufacturing business the COGS are the direct costs, direct labour and factory overheads incurred, for other businesses it can be the purchase cost of the product you are selling. - Gross Profit Margin also known as GM, is the residual sale dollars after you subtract COGS from your NSV. - The Gross Profit Margin % or GM% is a good ratio to understand how much money you make from every $1 of sale. In the example for every dollar of NSV generated. You can compare your GM% with competitors within your industry to compare efficiencies. - The GM are the funds available for your business to pay its overheads. Post by [Cross The T](https://www.crossthet.com.au/resources/author/cross-the-t) July 26, 2022 ### Comments ### Contact Us #### Free Consultation Book your free consultation now to get started. Learn More #### Our Services Our services are tailored to meet your needs. Learn More ![Vertical\_onWhite](https://www.crossthet.com.au/hubfs/Vertical_onWhite.svg) This website and its contents are of a general nature only and not intended to constitute legal advice. Please be sure to seek legal advice bespoke to your needs. Any views or opinions expressed are solely those of the author and do not necessarily reflect or represent those of Cross the T Pty Ltd. © Cross the T 2022. 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