Gross Profit

Date created: Feb 21, 2019  •   Last updated: Mar 15, 2021

What is Gross Profit?

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.

Alternate names: Gross Income

Formula

ƒ Sum(Revenue) - Sum(COGS)

How to calculate

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.

Gross Profit

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More about this metric

Gross Profit indicates how well a company uses its labour and supplies to produce goods and services. This measure only considers variable costs, such as direct labor or commission, as opposed to fixed costs, such as rent or insurance.

Gross Profit is always expressed as a monetary value. It’s equally important to look at Gross Profit as a percentage of Revenue (Gross Margin or Gross Margin Percentage).