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.