Troubleshooting the Gross Profit Report

The GP report allows the store to tell if they're earning a profit from the sales they're making. The report first gives you a detailed breakdown of your Cost of Sales by each stock category, then compares it against a Theoretical Cost of Sales worked out from item recipes and sales. 

The Report

Let's take a look at the what the report contains.

 First, after report header and notices, the report gives us a breakdown on the Net Sales from which it will work out the profit.

 On the right, it will indicate what stock cost calculation method it's using. (Fixed, FIFO, or Weighted average) .

 The report the breaks down the Actual stock usage by showing the value of stock at the Opening Stocktake, the Purchases, the value of Net Stock Movement (including Transfers and Manufacturing) , and the value of the Closing Stock for each stock category.

Like the stock variance report, the actual Cost of Sales is worked out from the following formula:

 The report then gives a comparison of the totals, and a final Difference between the two. This is then subtracted from the Net Sales to give you final Actual and Theoretical Gross Profit figures. Ideally, The actual needs to be as close to the theoretical as possible.

Troubleshooting

Any problems with the GP report will usually show up as a large figure in the Difference column. Troubleshooting the GP often means finding out what's causing the difference figure

Your first step in analysing a GP report should always be to run the report again with the option Show Detail ticked. This will give you a breakdown of COS figure per stock item. Now you can identify which items in particular are causing the problem.

Once the items are identified, compare the report against the Stock Variance report to determine if the problem is with stock controls. If there is a large variance in the Stock variance report, see the solution on Troubleshooting the Stock Variance report for further help.

Note that there are some differences between the stock variance report and the GP that need to be kept in mind when doing this - mainly that, as mentioned above, the GP report counts wastage, whereas the Stock variance does not. The reason for this is that wasted stock is still counted towards your COS, but on the stock variance report wasted stock can be accounted for.

For example: The following Hot Sub Rolls have been recorded accurately. Because the stock variance report records the 2 rolls in wastage, the stock is accounted for and therefore there is no variance. However, those two rolls will not show in the Net Stock Movement column in the GP. Instead they will reflect as a difference as the value of the wasted stock will be counted in the Actual COS.

Stock Variance Report for Hot Sub Rolls

GP Report for the same period

Next, look for errors caused by purchases that might have caused the stock prices to calculate incorrectly. This is easily the most common cause of GP problems, and a simple error in a GRV can carry over to affect everything in that stock item's row. To identify stock purchase issues, do the following:

• Run the Stock Purchases Exceptions report with a tolerance of at least 5%. This will display all purchases over that period and highlight any incorrect purchase prices. Look for abnormally high price variances for the stock item(s) in question. 

• If the stock item is a manufactured item or is part of a manufactured stock recipe, also run the Stock Manufacture Exceptions Report, which also looks for price variances in manufactured stock. These manufacture entries will need to be updated after correcting the GRV's. 

Once any problem GRV's have been identified, they need to be corrected by editing the problem line on the GRV.

Once fixed, the affected stock values will need to be refreshed. To do this, go to Lists > Stock > Items and click Refresh Costs to update the current stock costings. However, this only fixes current stock costings. You will also need to refresh the values in the stocktakes for the period you're running your report for if you're running fixed, and every stock take in the date range if you're running FIFO stock costing.

Restart Backoffice so that costs are updated once more, and re-run the report. This process may need to be repeated if there are multiple items.