Accounting
Basic

Gross Profit

What remains from sales after subtracting the direct cost of the goods sold, before operating expenses.

Formula

GP=Revenue−COGSGP = Revenue - COGS

Variables

GPGross profit
RevenueNet sales
COGSCost of goods sold

Example

Revenue $200k − COGS $120k = $80k gross profit

Did You Know?

Gross profit is the first profitability line on an income statement and funds every other expense below it.

gross profitmarginincome statement