Gross Profit
Short Definition
Revenue minus the cost of goods sold (COGS)
Long Definition
In accounting, Gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments. Note that this is different than operating profit.
Net sales are calculated:
Net sales = Sales – Sales returns and allowances
Gross profit is found by deducting the cost of goods sold:
Gross profit = Net sales – Cost of goods sold
Gross profit should not be confused with net income:
Net income = Gross profit – Total operating expenses
Cost of goods sold is calculated differently for merchandising business than for a manufacturer.
See also
See Related Analysis
See Related Resources
Source: http://en.wikipedia.org/wiki/Gross_profit
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