Gross Profit Definition

Gross profit is the difference between a company’s total revenue and its cost of goods sold. Gross profit margin is the ratio of gross profit to total revenue.

A company’s gross profit is the revenue it generates minus the costs associated with making and selling its products or services. In other words, gross profit is the amount of money a company has left over after paying for the direct costs associated with producing its goods or services.

Gross profit margin is a company’s gross profit divided by its total revenue. This number expresses what percentage of every dollar of sales a company keeps in earnings.