Gross profit: Difference between revisions
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Gross profit should not be confused with net income: |
Gross profit should not be confused with net income: |
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:[[Net income]] = Gross profit – Total operating expenses. |
:[[Net income]] = Gross profit – Total operating expenses.And is the best at what it do |
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[[Cost of goods sold]] is calculated differently for [[merchandising]] business than for a [[manufacturing|manufacturer]]. |
[[Cost of goods sold]] is calculated differently for [[merchandising]] business than for a [[manufacturing|manufacturer]]. |
Revision as of 17:29, 12 August 2009
In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments. Note that this is different from operating profit (earnings before interest and taxes).
Net sales are calculated:
- Net sales = Sales – Sales returns and allowances.
Gross profit is found by deducting the cost of goods sold:
- Gross profit = Net sales – Cost of goods sold.
Gross profit should not be confused with net income:
- Net income = Gross profit – Total operating expenses.And is the best at what it do
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Cost of goods sold is calculated differently for merchandising business than for a manufacturer.
See also
- EBITDA
- Profit margin, the ratio of net income to net sales