Definition of 'Gross Profit'
Gross profit is the difference between a company's revenue and its cost of goods sold (COGS). It is a measure of a company's profitability and is often used to compare companies in the same industry.
To calculate gross profit, you subtract COGS from revenue. For example, if a company has revenue of $100 and COGS of $50, its gross profit would be $50.
Gross profit is important because it tells investors how much money a company is making after paying for the cost of producing its products or services. A high gross profit margin indicates that a company is making a lot of money on each sale.
There are a few things that can affect a company's gross profit margin. These include the cost of materials, labor, and overhead. A company can also increase its gross profit margin by selling its products or services at a higher price.
Gross profit is a key metric for investors to consider when evaluating a company. It can help them determine whether a company is profitable and has the potential to grow in the future.
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