Gross Profit

Gross profit refers to the total amount that a business earns in net sales after deducting or taking into account all of the variable costs and expenses associated with providing its services and goods such as discounts, allowances, raw materials, factory overhead, etc. Fixed costs or operating expenses like rent, office supplies, health insurance, tax payments, salaries, and interest charges should not be included in this calculation. However, for a service business, the allocated overhead, labor, benefits, and payroll taxes of those who generate billable hours should be considered and reflected as service-related costs.


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