Gross Profit

In accounting, gross profit, gross margin, sales profit, or credit sales is the difference between revenue and the cost of making a product or providing a service, before deducting overheads, payroll, taxation, and interest payments. This is different from operating profit (earnings before interest and taxes). Gross margin is the term normally used in the U.S.,[1] while gross profit is the more common usage in the UK and Australia.

The various deductions (and their corresponding metrics) leading from net sales to net income are as follows:

Net sales = gross sales - (customer discounts + returns + allowances)
Gross profit = net sales - cost of goods sold
Gross profit percentage = [(net sales - cost of goods sold)/net sales] × 100%.
Operating profit = gross profit - total operating expenses
Net income (or net profit) = operating profit - taxes - interest

(Note: Cost of goods sold is calculated differently for a merchandising business than for a manufacturer.)

See also


  1. ^ Horngren, Charles (2011). Accounting, 9th Edition. Upper Saddle River, New Jersey 07458: Prentice Hall. ISBN 0132569051.

  This article uses material from the Wikipedia page available here. It is released under the Creative Commons Attribution-Share-Alike License 3.0.



Connect with defaultLogic
What We've Done
Led Digital Marketing Efforts of Top 500 e-Retailers.
Worked with Top Brands at Leading Agencies.
Successfully Managed Over $50 million in Digital Ad Spend.
Developed Strategies and Processes that Enabled Brands to Grow During an Economic Downturn.
Taught Advanced Internet Marketing Strategies at the graduate level.

Manage research, learning and skills at Create an account using LinkedIn to manage and organize your omni-channel knowledge. is like a shopping cart for information -- helping you to save, discuss and share.

  Contact Us