What is “gross profit” ?
Gross profit is sales minus cost of goods or cost of services
It is what is left over after a company has paid the direct costs incurred in making
the product or delivering the service
A business has to make enough gross profit to covers its overheads such as light and heat, phone, loan interest etc.
Gross profit varies from industry to industry. For example, in a grocery business, gross profit is a small percentage of sales however for a jewelry business, its a much large percentage.
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