The three main profit margin metrics are gross profit (total revenue minus cost of goods sold (COGS) ), operating profit (revenue minus COGS and operating expenses), and net profit (revenue minus all expenses) means for each $1 of revenue the company earns $0.10 in net profit. The Gross Profit Margin formula is calculated by subtracting the cost of goods sold from net sales and dividing the difference by net sales. Generally, a gross profit margins calculator would rephrase this equation and simply divide the total gross profit dollar amount we mentioned above by the net sales.

Gross Profit is the total amount of revenue a company generates after selling its products and services, less the cost that was incurred in producing and selling those products and services. It is defined as the cost of sales/goods. The gross profit percentage formula is calculated by subtracting cost of goods sold from total revenues and dividing the difference by total revenues. Usually a gross profit calculator would rephrase this equation and simply divide the total GP dollar amount we used above by the total revenues. Both equations get the result. Gross profit percentage formula = Gross profit / Total sales * 100% It can be further expanded as, Gross profit percentage formula = (Total sales – Cost of goods sold) / Total sales * 100%

Gross profit = Revenue - Cost of Goods Sold The result is a profit metric that reflects the amount of money left over to fund the business after accounting for the cost of simply producing a... The gross profit of a business is simply revenue from sales minus the costs to achieve those sales. Or, some might say sales minus the cost of goods sold.It tells you how much money a company would have made if it didn’t pay any other expenses such as salary, income taxes, copy paper, electricity, water, rent and so forth for its employees.

The formula of gross profit margin or percentage is given below: The basic components of the formula of gross profit ratio (GP ratio) are gross profit and net sales. Gross profit is equal to net sales minus cost of goods sold. Net sales are equal to total gross sales less returns inwards and discount allowed.