gross profit
Definition
Noun: 1. Gross Profit: In finance and accounting, this is a company's profit from its core business operations. It is calculated by subtracting the direct costs of producing the goods or services sold (Cost of Goods Sold) from the total revenue generated from sales (Net Sales). It represents the efficiency of production before accounting for operating expenses, taxes, and other overheads.
Usage Examples
- Noun:
- The company's gross profit increased by 15% this quarter, indicating better cost control in manufacturing.
- Analysts look at the gross profit margin to assess a company's fundamental financial health.
- A declining gross profit can signal rising material costs or pricing pressure.
Advanced Usage
- "Gross profit margin": This is a key financial ratio, expressed as a percentage, calculated by dividing gross profit by net sales. It shows the percentage of revenue that exceeds the cost of goods sold.
- A high gross profit margin suggests the company can command a premium price or has low production costs relative to its peers.
Variants and Related Words
- Gross Income: In business contexts, this is often used interchangeably with "gross profit." In personal finance, it refers to total income before deductions.
- Gross Margin: Commonly used synonym for "gross profit margin."
- Operating Profit (or EBIT): The profit after subtracting operating expenses (like rent, salaries) from the gross profit.
- Net Profit: The final profit after all expenses, including taxes and interest, have been deducted from revenue.
Synonyms
- Trading profit
- Gross income (in a business context)
Antonyms
- Gross loss
Noun
-
(finance) the net sales minus the cost of goods and services sold
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