How to Calculate Gross Profit

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The average ticket at chapola is probably somewhere around 12 dollars with tax all in, i think. You take revenue, seven dollar barido, you subtract your cost of goods sold, and you get a number called gross profit. A sign of pricing power is if you can increase the price of something to offset input cost inflation, without decreasing demand for the product.

Motley Fool Senior Analyst John Rotonti walks you through the most important financial statements through the sale of a burrito. (Yes, really.)

In part one of this two part series on financial statements, Rotonti discusses:

- How to understand balance sheets and income statements.

- A key metric that can tell you about a company’s pricing power.

- What you’re actually purchasing when you buy a stock.

Bonus Resources!

Chipotle’s valuation metrics - https://www.fool.com/premium/company/nyse/cmg/

Reconciling Net Income to Free Cash Flow - https://www.fool.com/investing/general/2014/09/24/reconciling-net-income-to-free-cash-flow.aspx

Stock discussed: CMG

Host: John Rotonti

Producer: Ricky Mulvey

Engineers: Rick Engdahl, Tim Sparks