gross profit
/ɡroʊs ˈprɒfɪt/
Meaning
Gross profit is the money a company makes after subtracting the direct costs of producing and selling its products or services. It does not include indirect expenses like rent, taxes, or office salaries. This figure helps businesses see if their core products are actually profitable to make.
Examples
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Our gross profit was up ten percent thanks to lower raw material costs.
Our gross profit was up ten percent thanks to lower raw material costs.
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To calculate gross profit, subtract the cost of goods sold from total revenue.
To calculate gross profit, subtract the cost of goods sold from total revenue.
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Even though our sales were high, our gross profit was surprisingly low.
Even though our sales were high, our gross profit was surprisingly low.
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The team is looking for ways to boost our gross profit next quarter.
The team is looking for ways to boost our gross profit next quarter.
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We reported a healthy gross profit, but our net income was negative due to high administrative costs.
We reported a healthy gross profit, but our net income was negative due to high administrative costs.
Common Mistakes
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✗ Our gross profit includes our office rent expenses.
✓ Our gross profit does not include our office rent expenses.
Gross profit only subtracts direct production costs (Cost of Goods Sold), not overhead costs like rent, utilities, or administrative salaries.
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✗ We had a gross profit of 20%.
✓ We had a gross profit margin of 20%.
Gross profit refers to the actual dollar amount of money made, while gross profit margin refers to the percentage.
Related Expressions
Practice
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To find your ___, you must subtract production costs from your total sales.
💡 This is profit before overhead and taxes are deducted.
Show answer
gross profit
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The factory's high efficiency led to a record-breaking ___ this month.
💡 It focuses purely on direct manufacturing costs.
Show answer
gross profit