In order to calculate gross profit, take the net sales and subtract the cost of sales. Find out how gross profit is essentially revenue minus the cost to produce that revenue help from two accountants in this free video on business calculations and accounting.
Hi! My name is Jeannine Smith and this is Spence Cottam. We're with Account Team in Salt Lake City, Utah.We help people get on top of their finances and get them back on track so they can get back to what they do best. Today, I'd like to talk to you a little bit about gross profit. Gross profit is net sales minus cost of sales. Now, this does not include your overhead expenses, your operating expenses that you'll have no matter what. This is just basically your revenue minus the cost to produce that revenue. For example, if you're a contractor, you'll take the sales of the service that you provide and subtract the cost to produce that service. If you're in retail or in manufacturing, you'll take the sales of all the goods that you produce and subtract the cost of those goods sold.