Gross profit


Gross profit is the profit that a company earns after deducting all the costs associated with manufacturing the firm’s product from the sales/revenue/turnover. 

The formula is: Gross profit = Revenue – cost of goods sold

Cost of goods sold include labour/manpower charges, raw material cost, the factory overheads. However, cost of goods does not include marketing and distribution expenditure. 

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Gross profit margin is the percentage of gross profits over net revenues.