{"id":1285,"date":"2020-04-13T22:29:44","date_gmt":"2019-08-19T15:46:54","guid":{"rendered":"https:\/\/www.aihello.com\/resources\/?p=1285"},"modified":"2026-09-23T10:04:22","modified_gmt":"2026-09-23T10:04:22","slug":"make-sure-you-are-not-losing-money-check-out-these-key-financial-factors-asap","status":"publish","type":"post","link":"https:\/\/www.aihello.com\/resources\/blog\/make-sure-you-are-not-losing-money-check-out-these-key-financial-factors-asap\/","title":{"rendered":"Make Sure You Are Not Losing Money! 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#d7e5f1;border-radius:12px;background:#f5f9fd;font-size:16px;line-height:1.8}\n.ah-reading-guide pre.wp-block-preformatted,.ah-reading-guide pre.wp-block-preformatted code{white-space:pre!important;text-align:left!important}.ah-reading-guide pre br{display:initial!important}\n.ah-reading-guide .wp-block-media-text{display:grid!important;grid-template-columns:minmax(120px,22%) minmax(0,1fr)!important;gap:24px;padding:28px;border:1px solid #d7e5f1;border-radius:14px;background:#f5f9fd;align-items:center!important}.ah-reading-guide .wp-block-media-text__content{min-width:0;max-width:none!important;width:auto!important;padding:0!important}.ah-reading-guide .wp-block-media-text__content p{width:auto!important;max-width:none!important;text-align:left!important}.ah-reading-guide .wp-block-media-text__content p:not(:first-child) strong{font-weight:400}.ah-reading-guide .wp-block-media-text__media{margin:0!important;min-width:0}.ah-reading-guide .wp-block-media-text__media img{width:100%;max-width:160px;height:auto;margin:auto}.ah-reading-guide .wp-block-media-text__content .wp-block-button{max-width:100%}@media(max-width:650px){.ah-reading-guide .wp-block-media-text{grid-template-columns:1fr!important;padding:20px}.ah-reading-guide .wp-block-media-text__media{grid-column:1!important;grid-row:1!important}.ah-reading-guide .wp-block-media-text__content{grid-column:1!important;grid-row:2!important}}.ah-reading-guide h2{font-size:26px;line-height:1.45}<\/style><noscript><style>.ah-reading-guide [data-aos]{opacity:1!important;visibility:visible!important;transform:none!important}<\/style><\/noscript><figure class=\"wp-block-image\"><a style=\"margin-left: auto; margin-right: auto;\" href=\"https:\/\/24k30f8hj3m39d1mr36er59l-wpengine.netdna-ssl.com\/wp-content\/uploads\/2016\/12\/Upclose-Image-of-mobile-ecommerce-shopping.jpg\"><img loading=\"lazy\" decoding=\"async\" title=\"what are the tools helpful in amazon ad performance improvement with professional help | what is amazon a10 | how to promote your products on amazon\" src=\"https:\/\/24k30f8hj3m39d1mr36er59l-wpengine.netdna-ssl.com\/wp-content\/uploads\/2016\/12\/Upclose-Image-of-mobile-ecommerce-shopping.jpg\" width=\"640\" height=\"426\" border=\"0\" \/><\/a><figcaption><strong>Are you actually making money online?<\/strong><\/figcaption><\/figure><p class=\"ah-lead\">Financial analysis helps us understand how <a  data-ilj-link-preview=\"true\"  data-featured-image=\"\"  data-excerpt=\"Boost online sales! Learn how to drive free traffic to your e-commerce store. Optimize design, master social media, prioritize customer care, and offer smart discounts.\" href=\"https:\/\/www.aihello.com\/resources\/blog\/attracting-customers-to-your-online-store\/\">your shop<\/a> is performing. There are two parts to a financial analysis: the statement of operations and the balance sheet. The statement of operations tells us how much money (or loss) your shop is achieving based on current <a  data-ilj-link-preview=\"true\"  data-featured-image=\"https:\/\/www.aihello.com\/resources\/wp-content\/uploads\/2022\/02\/boost-sales-300x200.jpg\"  data-excerpt=\"Unlock Amazon&#039;s Brand Referral Bonus! Discover how driving external traffic, especially from Google Ads, boosts your sales, increases organic reach, and earns rewards.\" href=\"https:\/\/www.aihello.com\/resources\/blog\/boost-amazon-sales-using-google-ads\/\">sales<\/a> and costs. The balance sheet tells us how many assets the firm has to support its current and future operations.<\/p><p>Here are some of the key factors to look for in your shop\u2019s statement of operations:<\/p><div class=\"wp-block-greenshift-blocks-container gspb_container gspb_container-gsbp-f1285-1\" id=\"gspb_container-id-gsbp-f1285-1\" data-aos=\"fade\" data-aos-easing=\"ease\" data-aos-duration=\"500\" data-aos-once=\"true\"><h2 id=\"1-revenues\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Revenues\"><\/span>1.&nbsp;&nbsp;&nbsp;&nbsp;Revenues:<span class=\"ez-toc-section-end\"><\/span><\/h2><\/div><p>Are revenues growing and at what rate? Many e-commerce companies have experienced impressive, even explosive, revenue growth as an entirely new channel is created.<\/p><h2 id=\"2-cost-of-sales\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Cost_of_sales\"><\/span>2.&nbsp; Cost of sales:<span class=\"ez-toc-section-end\"><\/span><\/h2><p>What is the cost of sales compared to revenues? Cost of sales typically includes the cost of the products sold and related costs. The lower the cost of sales compared to revenue, the higher the gross <a  data-ilj-link-preview=\"true\"  data-featured-image=\"https:\/\/www.aihello.com\/resources\/wp-content\/uploads\/2022\/02\/boost-sales-300x200.jpg\"  data-excerpt=\"Unlock Amazon&#039;s Brand Referral Bonus! Discover how driving external traffic, especially from Google Ads, boosts your sales, increases organic reach, and earns rewards.\" href=\"https:\/\/www.aihello.com\/resources\/blog\/boost-amazon-sales-using-google-ads\/\">profit<\/a>.<\/p><div class=\"wp-block-greenshift-blocks-container gspb_container gspb_container-gsbp-f1285-3\" id=\"gspb_container-id-gsbp-f1285-3\" data-aos=\"fade\" data-aos-easing=\"ease\" data-aos-duration=\"500\" data-aos-once=\"true\"><h2 id=\"3-gross-margin\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Gross_margin\"><\/span>3.&nbsp;&nbsp;&nbsp;&nbsp;Gross margin:<span class=\"ez-toc-section-end\"><\/span><\/h2><\/div><p>What is the firm\u2019s gross margin, and is it increasing or decreasing?<\/p><p class=\"ah-definition wp-block-paragraph\">Gross margin is calculated by dividing gross profit by net sales revenues.<\/p><p>Gross margin can tell you if the firm is gaining or losing market power vis-\u00e0-vis its key suppliers.<\/p><figure class=\"wp-block-image\"><a style=\"margin-left: 1em; margin-right: 1em;\" href=\"http:\/\/www.accountingformanagement.org\/wp-content\/uploads\/2014\/01\/cash-payment-for-expenses.png\"><img loading=\"lazy\" decoding=\"async\" title=\"what is cvr | how do you automate orders on shopify | how to get traffic to amazon listing\" src=\"http:\/\/www.accountingformanagement.org\/wp-content\/uploads\/2014\/01\/cash-payment-for-expenses.png\" width=\"640\" height=\"310\" border=\"0\" \/><\/a><\/figure><h2 id=\"4-operating-expenses\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Operating_expenses\"><\/span>4.&nbsp;&nbsp;&nbsp;&nbsp;Operating expenses:<span class=\"ez-toc-section-end\"><\/span><\/h2><p>What are the firm\u2019s operating expenses, and are they increasing or decreasing? Operating expenses typically include the cost of marketing, technology, and administrative overhead. They also include, in accordance with professional accounting standards, stock-based compensation to employees and executives, amortization of goodwill and other intangibles, and impairment of investments. <\/p><p>In e-commerce companies, these turn out to be very important gross margin gross profit divided by net sales expenses. Many e-commerce firms compensated their employees with stock shares (or options), and many e-commerce firms purchased other e-commerce firms as a part of their growth strategy. Many of the companies were purchased at extremely high values using company stock rather than cash; in numerous instances, the purchased companies fell dramatically in market value. <\/p><p>All these items are counted as normal operating expenses.<\/p><div class=\"wp-block-greenshift-blocks-container gspb_container gspb_container-gsbp-f1285-5\" id=\"gspb_container-id-gsbp-f1285-5\" data-aos=\"fade\" data-aos-easing=\"ease\" data-aos-duration=\"500\" data-aos-once=\"true\"><h2 id=\"5-operating-margin\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_Operating_margin\"><\/span>5.&nbsp; &nbsp;&nbsp;Operating margin:<span class=\"ez-toc-section-end\"><\/span><\/h2><\/div><p>What did the firm earn from its current operations?<\/p><p class=\"ah-definition wp-block-paragraph\">Operating margin is calculated by dividing operating income or loss by net sales revenue.<\/p><p>Operating margin is an indication of a company\u2019s ability to turn sales into pre-tax profit after operating expenses have been deducted. Operating margin tells <a  data-ilj-link-preview=\"true\"  data-featured-image=\"https:\/\/www.aihello.com\/resources\/wp-content\/uploads\/2022\/06\/selling-on-amazon-mexico-300x225.jpg\"  data-excerpt=\"Mexico&#039;s eCommerce boom presents huge opportunities for Amazon sellers. This guide explores the thriving Mexican online market, Amazon.mx&#039;s growth, and key considerations for successfully selling your products to millions of Mexican consumers. Learn how to navigate logistics, expand your reach, and capitalize on this expanding market.\" href=\"https:\/\/www.aihello.com\/resources\/blog\/how-to-launch-an-amazon-mexico-business\/\">us<\/a> if the firm\u2019s current operations are covering its operating expenses, not including interest expenses and other non-operating expenses.<\/p><h2 id=\"6-net-margin\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"6_Net_margin\"><\/span>6.&nbsp; &nbsp; Net margin:<span class=\"ez-toc-section-end\"><\/span><\/h2><p>Net margin tells us the percentage of its gross sales revenue the firm was able to retain after all expenses are deducted.<\/p><p class=\"ah-definition wp-block-paragraph\">Net margin is calculated by dividing net income or loss by net sales revenue.<\/p><p>Net margin sums up in one number how successful a company has been at the business of making a profit on each dollar of sales revenues. Net margin also tells us something about the efficiency of the firm by measuring the percentage of sales revenue it is able to retain after all expenses are deducted from gross revenues, and, within a single industry, it can be used to measure the relative efficiency of competing firms. <\/p><p>Net margin takes into account many non-operating expenses such as interest and stock compensation plans.<\/p><h2 id=\"a-balance-sheet-provides-a-financial-snapshot-of-a-company-s-assets-and-liabilities-debts-on-a-given-date\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_balance_sheet_provides_a_financial_snapshot_of_a_companys_assets_and_liabilities_debts_on_a_given_date\"><\/span>A balance sheet provides a financial snapshot of a company\u2019s assets and liabilities (debts) on a given date.<span class=\"ez-toc-section-end\"><\/span><\/h2><p>Assets refer to stored value. Current assets are those assets such as cash, securities, accounts receivable, <a  data-ilj-link-preview=\"true\"  data-featured-image=\"https:\/\/www.aihello.com\/resources\/wp-content\/uploads\/2017\/09\/14852061501918-300x166.jpg\"  data-excerpt=\"E-commerce didn&#039;t kill physical stores, but consumers still find flaws. Uncover top frustrations like queues, stock problems, and poor staff training.\" href=\"https:\/\/www.aihello.com\/resources\/blog\/the-4-realities-that-most-frustrate-and-annoy-buyers-in-physical-stores\/\">inventory<\/a>, or other investments that are likely to be able to be converted to cash within one year. Liabilities are outstanding obligations of the firm. Current liabilities are debts of the firm that will be due within one year. Liabilities that are not due until the passage of a year or more are characterized as long-term debt. <\/p><p>For a quick check of a firm\u2019s short-term financial health, examine its <a  data-ilj-link-preview=\"true\"  data-featured-image=\"https:\/\/www.aihello.com\/resources\/wp-content\/uploads\/2019\/08\/How-much-money-do-you-need-to-keep-your-ecommerce-business-running-Use-AI-to-find-out-300x169.jpeg\"  data-excerpt=\"eCommerce success hinges on working capital. Forecast sales &amp; optimize inventory investment. Budget effectively, reduce costs, and accelerate business growth.\" href=\"https:\/\/www.aihello.com\/resources\/blog\/budget-your-working-capital-efficiently-to-maximize-the-growth-of-your-business\/\">working capital<\/a> (the firm\u2019s current assets minus current liabilities). If\u00a0\u00a0<a  data-ilj-link-preview=\"true\"  data-featured-image=\"https:\/\/www.aihello.com\/resources\/wp-content\/uploads\/2019\/08\/How-much-money-do-you-need-to-keep-your-ecommerce-business-running-Use-AI-to-find-out-300x169.jpeg\"  data-excerpt=\"eCommerce success hinges on working capital. Forecast sales &amp; optimize inventory investment. Budget effectively, reduce costs, and accelerate business growth.\" href=\"https:\/\/www.aihello.com\/resources\/blog\/budget-your-working-capital-efficiently-to-maximize-the-growth-of-your-business\/\">working capital is<\/a> only \u00a0marginally positive, or negative, the firm will likely have trouble\u00a0meeting its short-term obligations. Alternatively, if a firm has a large amount of current\u00a0assets, it can sustain operational losses for a period of time.<\/p><p class=\"ah-callout\">If you would like to get started on <a  data-ilj-link-preview=\"true\"  data-featured-image=\"https:\/\/www.aihello.com\/resources\/wp-content\/uploads\/2021\/11\/hybrid-300x177.jpg\"  data-excerpt=\"Master Amazon selling with AiHello AutoPilot Hybrid. Our solution and PPC experts optimize ads, boost sales, and lower your Amazon ad costs.\" href=\"https:\/\/www.aihello.com\/resources\/blog\/how-aihello-autopilot-hybrid-solution-with-a-dedicated-ppc-specialist-can-boost-your-amazon-store\/\">AiHello<\/a>\u00a0<a href=\"https:\/\/www.aihello.com\/account\/register\" target=\"_blank\" rel=\"noopener noreferrer\">click here<\/a>\u00a0for a free 14 days trial.<\/p><\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>Boost your e-commerce profit! Discover how financial analysis, including statements of operations and balance sheets, helps you truly understand if your online shop is making money.<\/p>\n","protected":false},"author":1,"featured_media":5108,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_gspb_post_css":".gspb_container-id-gsbp-f1285-1,.gspb_container-id-gsbp-f1285-3,.gspb_container-id-gsbp-f1285-5{flex-direction:column;box-sizing:border-box}#gspb_container-id-gsbp-f1285-1.gspb_container>p:last-of-type,#gspb_container-id-gsbp-f1285-3.gspb_container>p:last-of-type,#gspb_container-id-gsbp-f1285-5.gspb_container>p:last-of-type{margin-bottom:0}#gspb_container-id-gsbp-f1285-1.gspb_container.aos-animate,#gspb_container-id-gsbp-f1285-1.gspb_container[data-gs-aos],#gspb_container-id-gsbp-f1285-3.gspb_container.aos-animate,#gspb_container-id-gsbp-f1285-3.gspb_container[data-gs-aos],#gspb_container-id-gsbp-f1285-5.gspb_container.aos-animate,#gspb_container-id-gsbp-f1285-5.gspb_container[data-gs-aos]{opacity:1;transform:translateZ(0)}#gspb_container-id-gsbp-f1285-1.gspb_container,#gspb_container-id-gsbp-f1285-3.gspb_container,#gspb_container-id-gsbp-f1285-5.gspb_container{position:relative;transition-duration:.5s;transition-timing-function:var(--gs-root-animation-easing, cubic-bezier(0.42, 0, 0.58, 1));opacity:var(--gs-root-animation-opacity, 0);transition-property:opacity,transform,filter;box-sizing:border-box}","footnotes":""},"categories":[1,163],"tags":[451,450,449,448],"republish_tag":[],"class_list":["post-1285","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-advertising","category-resources","tag-online-revenue","tag-online-sales","tag-online-shop-management","tag-shop-management"],"_links":{"self":[{"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/posts\/1285","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/comments?post=1285"}],"version-history":[{"count":1,"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/posts\/1285\/revisions"}],"predecessor-version":[{"id":14381,"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/posts\/1285\/revisions\/14381"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/media\/5108"}],"wp:attachment":[{"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/media?parent=1285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/categories?post=1285"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/tags?post=1285"},{"taxonomy":"republish_tag","embeddable":true,"href":"https:\/\/www.aihello.com\/resources\/wp-json\/wp\/v2\/republish_tag?post=1285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}