Quick Definition

Gross profit is the total revenue of a company minus the cost of goods sold (COGS), representing the profit a company makes after deducting the costs associated with making and selling its products.

Formula

Examples

• 1A company sells $100,000 worth of products and the cost to produce these products is $60,000. The gross profit would be $40,000.
• 2During a fiscal quarter, a retailer generates $500,000 in sales and incurs $300,000 in direct costs. The gross profit for that period is $200,000.
• 3A manufacturer reports annual revenues of $1 million and COGS of $700,000, resulting in a gross profit of $300,000.

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