Gross Profit

What is Gross Profit?

The amount remaining when the cost of sales is deducted from revenue, before any other expenses of running the business are taken into account. Gross profit measures how much a business earns on the goods it actually sells, so a change in it points to a change in selling prices or in direct costs, and not to a change in overheads such as rent, salaries or marketing.

This definition is part of the Financial Information and Decisions chapter in Cambridge O Level Business Studies.

Concepts related to Gross Profit

• cost of sales
• expenses
• gross profit margin