Custom QuickBooks Reporting & Analysis | Cost of a Mistake

This custom QuickBooks reporting module will query your actual data from QuickBooks® and calculate the gross revenue required to cover a mistake.

 

Definitions

·                 Gross Revenue:  Revenue minus Cost of Goods Sold

·                 COGS:  Cost Of Goods Sold is the cost of producing goods  or services sold by a company

·                 Expenses:  The outflow of money or assets given to another person or company.

·                 Net Revenue (EBITDA):  Operating Revenue – Operating Expenses + Other Revenue, Revenue after expenses but before interest, tax, depreciation, and amortization.

·                 EBITDA:  Earnings Before Interest, Taxes, Depreciation, and Amortization

·                 Profit Margin:  Net Revenue divided by Gross Revenue.  Example: If you sell a loaf of bread for $10 and after expenses you made 5 dollars on it then your profit margin would be 50%. 

·                 Actual Monetary Cost (Loss) of a Mistake or Error:  This is the amount of money lost because of a mistake or error.

·                 Revenue Required To Make Up The Lost Dollars:  Cost of the Mistake divided by the Profit Margin

 

What This Does For You

Use this Business Analysis tool to raise awareness in your company of the importance of accurate execution and how it affects the bottom line. You can also use this to aid in performance evaluations where actual measurements on projects, departments or products are needed.  

 

How To Use This Model

Type an amount for the “Actual Monetary Cost (Loss) of a Mistake or Error”.  This is the money lost because of mistake or error.  “The Revenue Required to Make up the Lost Dollars” is the Cost of the Mistake divided by the Profit Margin.  You can then plug in the What If numbers to see how just a minor improvement in various areas affects the cost of a mistake. Of course, the best use of the custom QuickBooks reporting tool is to create awareness of errors and how much they really cost in effort, time and money.

Example:

Based on their actual performance, this company must gross an extra $200,000 to net enough to cover the $35,000 mistake.

 

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