Gross Profit Accounting Formula is a calculation that measures the profitability of a company’s core business. It takes into account total sales revenue and subtracts all related costs to determine the profit before any other expenses are removed. The gross profit formula is usually expressed as follows: Gross profit = Total Revenue – Cost of Goods Sold. This calculation is useful for understanding a company’s overall performance and can be used to compare multiple businesses over time. By analyzing this formula, entrepreneurs can quickly make decisions about where to allocate their resources in order to maximize their profits.