Lesson 4 of 4 · Reading Your Reports

The four numbers worth watching.

Gross margin, net margin, break-even and cash runway. Move the sliders with your own figures and see where your business actually sits.

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Start at revenue, take the cost of what you sold, then take the cost of staying open. What survives both is the margin worth watching.
Healthy depends on what you sell. A reseller at 25% and a service business at 75% can both be fine. Net margin is the stricter test: under 5% leaves no buffer for a slow month.
Rp 15,000,000
60%

Below this, you are funding the business. Above it, 60% of every extra rupiah is yours.

Fixed costs divided by gross margin is the sales figure where profit is exactly zero. Move either one and watch the crossing move with it.
Rp 30,000,000
Rp 10,000,000

If income stopped tomorrow, you could keep operating for 3.0 months.

Three months or more gives you room to react to a bad month. Under one month, a single late payment can stop you paying suppliers or staff.

  • Gross margin: what it is and how to work it out

    Gross margin equals Sales Revenue minus Cost of Goods Sold, divided by Sales Revenue, expressed as a percentage. It tells you whether your core pricing covers what you sell, before any overheads.

  • Gross margin: what is healthy

    A reseller or retailer is often healthy at 20-30%, a food or beverage business more like 55-65%, and a service business can run 70% or higher. A margin that keeps sliding usually means supplier costs rose or discounting crept in.

  • Net margin: what it is and how to work it out

    Net margin equals net profit divided by Sales Revenue, after every expense and tax. It is the share of each rupiah of sales that survives everything and ends up as profit.

  • Net margin: what is healthy

    A small Indonesian business holding a net margin of 5-15% is generally healthy. Below 5% leaves almost no buffer for a slow month, and a negative net margin for two or three months running is a warning to act, not wait.

  • Break-even: what it is and how to work it out

    Break-even revenue equals fixed costs divided by gross margin percentage. It is the sales figure at which profit is exactly zero, and below it you are funding the business from savings or debt. The formula uses gross margin as a stand-in for contribution margin, which only holds if Cost of Goods Sold genuinely varies with sales and is not padded with fixed costs.

  • Break-even: a worked figure

    Rp 15,000,000 of fixed costs a month at a 60% gross margin needs Rp 25,000,000 of revenue just to break even. Sales above that figure are where profit starts.

  • Cash runway: what it is and how to work it out

    Cash runway equals your cash and bank balance divided by your average monthly cash outflow. The highlighted Cash and bank balance figure on the Transaction Log is that first number. It answers a question profit never touches: how many months can you keep operating if income stopped tomorrow.

  • Cash runway: what is healthy

    Three months of runway or more gives room to react to a bad month. Under one month means a single late payment or slow week can stop you paying suppliers or staff. Treat that as urgent.

  • Check these four every month, not just at year end

    Gross margin, net margin, break-even and cash runway together catch problems the P&L alone hides. A business can look profitable and still be one slow month from trouble if nobody is watching these.

You now know what your books are doing.

Orbit does it for you. Upload a bank statement and every transaction is categorised, both sides are posted, and these three statements arrive at the end of the month.

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