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Gross profit is expressed as a currency value, while gross profit margin is a percentage. The formula is: Gross Profit Margin = (Revenue – Cost of Goods Sold) / Revenue x 100
The formula to calculate gross profit subtracts a company’s cost of goods sold (COGS) from its net revenue. The “Gross Profit” is recognized near the top of a company’s income statement, wherein the gross profit is the first profit metric upon deducting COGS from net revenue.
Formula for Gross Profit. Gross profit is calculated by subtracting COGS from revenue. Revenue. Depending on the company, revenue may also be called “sales revenue” or “sales.” Revenue is the total value of income generated from sales for a particular period.
How to Calculate Gross Profit. You can calculate your gross profit with the following formula: Gross Profit = Revenue - Cost of Goods Sold Revenue. Revenue is the total money your company makes from its products and services before taking any taxes, debt, or other business expenses into account.
The gross profit formula is calculated by subtracting COGS from revenue, and the total is displayed as a dollar amount: Cost of Goods Sold - Revenue = Gross Profit. How To Calculate Gross Profit: Examples. What is an example of gross profit? Using the formula above, the following examples help illustrate how to calculate gross profits:
Gross profit formula. The gross profit formula calculates profit by subtracting the cost of goods sold from revenue: Gross profit = (Revenue - Cost of goods sold) You’ll need to know your total revenue and cost of goods sold before determining your gross profit.
Gross profit is calculated by subtracting the cost of goods sold from the business’s revenues for a given period. Cost of goods sold includes the cost of inventory sold to customers or the cost of services provided, like materials, tools, freight, and labor, incurred while generating revenues.