Gross Profit

What is Gross Profit?

Gross profit is the profit a company makes after deducting the costs associated with making and selling its products or providing its services. It is calculated by subtracting the cost of goods sold from total revenue.

Why It Matters

• It shows how efficiently a company manages its labor and supplies in the production process.

• Gross profit provides the funds necessary to cover operating expenses, taxes, and interest.

• A declining gross profit margin may indicate rising production costs or pressure to lower prices.