Problems Influencing Planet Antares Vending Machine Profitability
Even if all the vending locations start earning good profits, there can be problems that can arise in your Planet Antares vending operations. Most of these problems can be classified under five major categories, as follows:
1) Gross sales
Depending on the population of the location, sales will also vary. As the population increases or decreases, so will the location sales. If a new fast food outlet is opened near the place of your vending machines, sales can decrease. Since gross sales are the main determinant of the bottom line, they need to be monitored carefully.
2) Gross profits
Gross profits are the difference between sales and cost of goods sold. If product costs increase and you cannot raise selling prices in your Planet Antares vending business, the gross profit from the location will fall. Similarly, if all the cash collected is not returned by a dishonest employee, reported sales will fall while the product costs will remain the same, resulting in a fall in gross profits too.
3) Operating costs
We should restrict the Planet Antares vending operating cost to only those costs that relate to the client. Usually, these are the direct, variable costs associated with servicing the client. The major ones are direct labor and vehicle, commissions, equipment, depreciation, sales taxes, etc.
4) Net profits
As is obvious from the name, net profits are what are left after deducting all the operating expenses. It should be calculated in both dollars and percentages.
5) Return on investment (ROI)
This is the net profit from the location, annualized, expressed as a percentage of the capital investment in that location. If a location provides annual profits of $5000 and needs a capital investment of $25000, the ROI will be calculated as 20 percent.
This is important to understand the acceptable net profits, expressed as a percent of sales and avoid any problems. You should monitor all these aspects for ensuring efficiency of operations in your Planet Antares vending business.
1) Gross sales
Depending on the population of the location, sales will also vary. As the population increases or decreases, so will the location sales. If a new fast food outlet is opened near the place of your vending machines, sales can decrease. Since gross sales are the main determinant of the bottom line, they need to be monitored carefully.
2) Gross profits
Gross profits are the difference between sales and cost of goods sold. If product costs increase and you cannot raise selling prices in your Planet Antares vending business, the gross profit from the location will fall. Similarly, if all the cash collected is not returned by a dishonest employee, reported sales will fall while the product costs will remain the same, resulting in a fall in gross profits too.
3) Operating costs
We should restrict the Planet Antares vending operating cost to only those costs that relate to the client. Usually, these are the direct, variable costs associated with servicing the client. The major ones are direct labor and vehicle, commissions, equipment, depreciation, sales taxes, etc.
4) Net profits
As is obvious from the name, net profits are what are left after deducting all the operating expenses. It should be calculated in both dollars and percentages.
5) Return on investment (ROI)
This is the net profit from the location, annualized, expressed as a percentage of the capital investment in that location. If a location provides annual profits of $5000 and needs a capital investment of $25000, the ROI will be calculated as 20 percent.
This is important to understand the acceptable net profits, expressed as a percent of sales and avoid any problems. You should monitor all these aspects for ensuring efficiency of operations in your Planet Antares vending business.
posted by Jane Dickens at
5:59 AM
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