Gross profit is the simple calculation of total sales minus total cost of goods sold. It shows you how much profit your business made before taking into account any other expenses, such as rent and salaries. By subtracting this number from total sales revenue, you get a clearer understanding of what your actual profits were after all expenses were paid out. This calculation provides an important insight into the financial health of your business, giving you an accurate view of how much money you’re really making every month.