ECONOMICS

Detailed explanation-1: -Gross profit is the difference between a company’s total revenue and its total cost of goods sold, which is calculated by subtracting the cost of goods sold from the total revenue. It is also referred to as gross margin or gross income.

Detailed explanation-2: -The cost of sales is calculated as beginning inventory + purchases-ending inventory. The cost of sales does not include any general and administrative expenses.

Detailed explanation-3: -The gross profit margin formula, Gross Profit Margin = (Revenue – Cost of Goods Sold) / Revenue x 100, shows the percentage ratio of revenue you keep for each sale after all costs are deducted. It is used to indicate how successful a company is in generating revenue, whilst keeping the expenses low.

Detailed explanation-4: -Gross profit is revenue minus the cost of providing the goods or services sold.