GROSS PROFIT Meaning and
Definition
-
Gross profit refers to the financial metric that represents the difference between revenue generated from sales and the cost of goods sold. It measures the profitability of a company's core operations by considering only the direct costs associated with producing and delivering its products or services.
To calculate gross profit, one subtracts the cost of goods sold (COGS) from total revenue. COGS includes expenses directly related to production, such as raw materials, manufacturing labor, and production overhead. Gross profit does not consider other expenses like selling, general, and administrative costs or interest or tax expenses.
Gross profit is essential for evaluating a company's ability to generate revenue from its products or services before considering other expenses. It helps assess the efficiency of a company's production process, pricing strategy, and inventory management. A higher gross profit margin indicates that a company is effectively generating revenue and controlling its production costs, which can be a positive sign for investors.
Gross profit is particularly significant in industries that involve high levels of competition and price sensitivity, as it highlights a company's competitive advantage or vulnerability. It is also used to compare the performance of different companies within the same industry and to track a company's profitability over time.
Top Common Misspellings for GROSS PROFIT *
* The statistics data for these misspellings percentages are collected from over 15,411,110 spell check sessions on www.spellchecker.net from Jan 2010 - Jun 2012.
Other Common Misspellings for GROSS PROFIT
- fross profit
- vross profit
- bross profit
- hross profit
- yross profit
- tross profit
- geoss profit
- gdoss profit
- gfoss profit
- gtoss profit
- g5oss profit
- g4oss profit
- griss profit
- grkss profit
- grlss profit
- grpss profit
- gr0ss profit
- gr9ss profit
Etymology of GROSS PROFIT
The etymology of the word "gross profit" can be traced back to the Latin language.
The word "gross" comes from the Latin word "grossus", meaning thick, large, or coarse. It has evolved over time to also signify total, general, or whole.
The word "profit" has its origins in the Latin word "proficere", which means to make progress or to advance. It later developed into "profitus", meaning beneficial or advantageous.
When combined, "gross profit" refers to the total or overall profit derived from a business, without taking into account any deductions or expenses.
Similar spelling word for GROSS PROFIT
Infographic
Add the infographic to your website:
