Entity: GROSS-PROFIT
Gross profit refers to the financial gain of a company after deducting the costs associated with manufacturing and distributing its goods or services. It is a key indicator of a company's profitability.
Gross Profit
Etymology
The term 'gross profit' originates from the combination of 'gross' meaning total or overall, and 'profit' referring to financial gain.
Definition
Gross profit is the profit a company makes after deducting the costs of producing and selling its products or services, but before fixed costs are taken into account. It is calculated by subtracting the cost of goods sold from net sales.
Historical Context
The concept of gross profit has been a fundamental measure in business accounting for centuries, allowing companies to assess their operational efficiency and profitability.
Cultural Significance
Gross profit serves as a crucial metric for investors, analysts, and business owners to evaluate a company's financial health and performance. It influences strategic decision-making and financial planning.
Related Concepts
- Net Profit: The total profit a company makes after deducting all expenses, including taxes and interest.
- Operating Profit: The profit earned from a company's core business operations, excluding interest and taxes.
See Also
Gross profit is the profit a company makes after deducting the costs of producing and selling its products or services, but before fixed costs are taken into account.