Gross Profit

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Dictionary Says

Definition of 'Gross Profit'

A company's revenue minus its cost of goods sold. Gross profit is a company's residual profit after selling a product or service and deducting the cost associated with its production and sale.

To calculate gross profit: examine the income statement, take the revenue and subtract the cost of goods sold. Also called "gross margin" and "gross income".
Investopedia Says

Investopedia explains 'Gross Profit'

When analyzing a company, gross profit is very important because it indicates how efficiently management uses labor and supplies in the production process. More specifically, it can be used to calculate gross profit margin. Keep in mind that gross profit varies significantly from industry to industry. For example, take a look at the following situation to see how gross profit indicates a company's efficiency.

Company A and Company B both have $1 million in sales. Company A's cost of goods sold (COGS) is $900,000 and Company B's COGS is $800,000. Company A's gross profit will be $100,000 and Company B's gross profit will be $200,000. Company B spends less money to make the same amount of sales, and is therefore more efficient.
Search results for

'Gross Profit'

  • Profitability Indicator Ratios: Profit Margin Analysis ...

    http://www.investopedia.com/university/ratios/profitability-indicator/ratio1.asp
    This section provides an indepth explanation of gross, operating, pretax and net
    profit margins. ... gross profit, operating profit, pretax profit and net profit. ...

  • A Look At Corporate Profit Margins

    http://www.investopedia.com/articles/fundamental/04/042804.asp
    ... cents. There are three key profit-margin ratios: gross profit margins,
    operating profit margins and net profit margins. 1. Gross ...

  • R&D Spending And Profitability: What's The Link?

    http://www.investopedia.com/articles/fundamental-analysis/10/research-development-rorc.asp
    ... Calculating RORC RORC tells us how much gross profit is generated for every
    dollar of R&D spent in the previous year. The calculation ...

  • Monsanto Growing Slower This Spring

    http://stocks.investopedia.com/stock-analysis/2010/Monsanto-Growing-Slower-This-Spring-MON-DE-ADM-BG0409.aspx
    ... profit guidance would be met at the lower end of the range, the company explicitly
    stated that its previous goal of doubling its 2007 gross profit number by ...

  • Value Investing: Finding Value In Income Statements | Investopedia

    http://www.investopedia.com/university/value-investing/value-investing5.asp
    ... Subtracting the cost of revenue from the actual revenue generated produces the gross
    profit. ... There are two types of profit margin: net and gross. ...

  • Fundamental Analysis: The Income Statement | Investopedia

    http://www.investopedia.com/university/fundamentalanalysis/fundanalysis6.asp
    ... Gross profit is calculated as revenue minus cost of sales. Returning to
    Wal-Mart again, the gross profit from the sale of the soap ...

  • Interpreting A Strategy Performance Report

    http://www.investopedia.com/articles/fundamental-analysis/10/strategy-performance-reports.asp
    ... This metric is calculated by subtracting the gross loss of all losing trades (including
    commissions) from the gross profit of all winning trades. ...

  • Understanding The Income Statement

    http://www.investopedia.com/articles/04/022504.asp
    ... Gross Profit (aka gross income or gross margin): A company's gross profit does more
    than simply represent the difference between net sales and the cost of sales ...

  • PotashCorp Perfect For The Long Term

    http://stocks.investopedia.com/stock-analysis/2010/PotashCorp-Perfect-For-The-Long-Term-POT-MOS-CF-AGU-MOO0506.aspx
    ... For the quarter, potash sales generated $900 million of the company's $1.7 billion
    in revenues and gross profit of $516 million, a margin of over 55%. ...

  • Catching Comeback Stocks For Clients

    http://www.investopedia.com/articles/financialcareers/06/turnaroundstocks.asp
    ... (For more on this, see Evaluating A Company's Management and Putting Management
    Under The Microscope.) 3. Gross Profit Improvement Companies must not only be ...

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