Gross Profit vs Net Profit
Definition of Gross Profit vs Net Profit
The cost of goods sold is different from operating expenses, which are fixed costs that do not directly depend on the companyÃ¢â‚¬Ëœs output. These include rent, management salaries, marketing, insurance, and others.
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What Is the Difference Between Net Profit and Gross Profit?
Here’s how to calculate the three main levels of profit:
- Gross Profit = Revenue – Cost of Goods Sold
- Operating Income = Gross Profit – Operating Expenses
- Net Profit = Operating Income – Other Costs
Gross Profit vs Net Profit FAQs
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.