Gross Profit

Gross profit is the net of revenue and cost of goods sold and represents the net margin earned by the company from main activity of company may it be sale of goods or rendering of services.
The gross profit will be calculated as follows:

In case of business engaged in manufacturing and sale of goods

Sales
Less:  Cost of goods sold
=   Gross Profit

 

In case of business engaged in provision of services

           Services Revenue
Less:   Direct costs (attributable to services provided)
=   Gross Profit

Related Post