How to Determine the Annual Sale Profits From Previous Sales

To understand the value of a company, it is useful to look at its previous annual sales profits. To calculate a firm's previous annual sales profits you will need access to the previous sales figures as well as the cost of goods sold. You can calculate the previous annual sales profits using these figures and simple arithmetic.

Instructions

1. Add up the total sales from the previous year in question. These can be found on the company's income statement. Either add up the total sales for all the income statements over the course of the year, or use the annual figure if you have an annual income statement, which is found in the annual report.

2. Add up the cost of goods sold for the previous year in question. This figure is also found on the income statement, where it may be abbreviated as COGS. Again, if you have access to the annualized income statement you can use the annual figure.

3. Subtract the annual cost of goods sold from the annual sales. This will give you the total annual profits for the year in question.

References

• "Financial Accounting: An Introduction to Concepts, Methods and Uses"; Clyde P. Stickney, et al.; 2009