Gross Profit Definition: Gross profit refers to the revenue a company or business makes from selling services or products, less the costs directly associated with selling and marketing these items.
These costs, referred to as the COGS or cost of goods sold, are deducted from the revenue and reported as gross profit or earnings on an income statement.
Gross profit is also known as gross income or sales profit. Gross profit is often used to assess a business’s ability to produce high profits against the cost of labor, marketing, and other expenses related to the sale of goods and services, such as raw materials and operating costs.
In general, reports that include gross profit do not include fixed costs and only variable expenses, which directly impact revenue.
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