What is the difference?
Gross Profit vs Net Profit
Gross Profit
Net Profit
What is it?
Gross Profit is the amount left over from total revenues after Cost of Goods Sold (COGS) has been deducted. COGS will typically include the cost of making and selling the product or the cost of services provided by the company.
Net profit is the value that remains after all expenses are subtracted from the company’s total income. It is one of the best ways to determine a business' profitability and is often referred to as the bottom line.
Who is it for?
Categories
Formula
Example
An Oil & Gas company generated a total revenue of $1 million in 2019, and incurred a COGS of $400,000 in that same year. Therefore, the company's gross profit for 2019 was $600,000.
A software company sells software and ongoing product maintenance. They earned $3M of Revenue in the fiscal year. In the same year, the company sold a pile of office furniture which netted a gain on disposal of assets in the amount of $0.5M. All other annual costs, such as salaries, wages for seasonal contractors, commissions for agents, office rent, utilities, software subscriptions, office supplies, income tax, and interest costs totaled $1.5M. The Net income for this company for the current fiscal year is $2M: $3M Revenue - $1.5M OPEX + $0.5M Gain on assets.
Track this metric
Published and updated dates
Date created: Feb 21, 2019
Latest update: Feb 25, 2022
Date created: Jan 15, 2019
Latest update: Feb 25, 2022