What is Gross Profit ?

Gross Profit (Definition)

The gross profit is the profit a business makes after deducting all the costs associated with producing and distributing its goods or services. To figure out your gross profit, subtract your total sales from the cost of goods sold (COGS). Your total sales will include all goods that were sold but will not include assets. A company's gross profit is a measure of how well it utilises its resources to produce items or provide services to customers. Profitability and financial performance are heavily dependent on this number and a decline in gross profit generally means a business is making less money.

Gross profit = Total Sales – Cost of Goods Sold