Gross Profit Vs. Gross Margin
Gross Profit is the profit that a company makes after deducting the cost of goods sold (COGS) from its revenue. COGS includes the direct costs of producing or acquiring the goods that a company sells, such as raw materials, labor costs, and manufacturing overheads. Gross Profit is calculated by subtracting COGS from the revenue
Gross Profit = Sale-COGS
Gross Margin Gross margin is a percentage that represents the amount of revenue a company keeps after accounting for the direct costs of producing its products or services. It’s calculated by dividing gross profit by total revenue and multiplying the result by 100. This figure represents the percentage of revenue that is left over after accounting for the costs of production.
Gross Margin = Gross Profit/Sale*100
Example :
Sale =100
COGS = 50
Gross Profit = Sale-COGS
Gross Profit = 100-50 = 50
Gross Margin = Gross Profit/Sale*100
Gross Margin = 50/100*100 = 50%