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

Keep Important Definitions in One Place

page_revision: 8, last_edited: 1220895352|%e %b %Y, %H:%M %Z (%O ago)
Unless stated otherwise Content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License