Gross Profit

What is Gross Profit?

Gross Profit is a financial metric that represents the difference between a company's revenue from goods sold and the cost of goods sold (COGS). It shows how efficiently a company is managing its production and is a key indicator of its ability to cover other expenses while still achieving profitability.

Short Description: The financial metric indicating the difference between revenue and the cost of goods sold (COGS), showing a company's efficiency in managing production costs.

• Revenue: The total sales generated from goods sold or services provided during a specific period.
• Cost of Goods Sold (COGS): The direct costs associated with the production of goods sold by a company. This includes costs related to materials and labor directly used to create the product.
• Gross Profit Calculation: Calculated as Revenue - COGS.

Gross Profit is essential for analyzing a company's core business operations without accounting for indirect expenses. It provides a snapshot of how well a company can manage its production costs and pricing strategy.