Gross profit

What is gross profit?

Gross profit is the profit that the company receives after deducting the costs associated with the sale of its products, for example, manufacturing costs. It is usually indicated in the income statement before the transfer of selling, general and administrative expenses.

Why is gross profit important?

Gross profit reflects a company's core profitability and its overhead while also illustrating the financial success of a product or service.

How is gross profit calculated?

Gross Profit = Total Revenue - Costs of Goods Sold.

Why is there no gross profit for some companies?

If a company is classified as insurance or bank, gross profit will not be available due to its calculation methodology. These companies will not have Costs of Goods Sold, which is used in the calculation.