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Gross profit |
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Gross profitThe difference between (i) turnover and (ii) the cost of making a product or providing a service, before taking into account overheads, salaries and wages, and interest payments.The logical step after calculating gross profit is to go on to calculate the gross profit margin, which is the gross profit as a percentage of turnover.Example: a company has turnover of £10m and the cost of providing its service is £5mits gross profit is £5mits gross profit margin is £5m / £10m x 100 = 50%Gross profitSales minus the cost of goods sold.Gross profit Similar MatchesProfit centerProfit centerA division of an organization held responsible for producing its own profits. Profit marginProfit marginOperating profit as a percentage of sales (or turnover). To calculate profit margin, multiply operating profit by 100, and divide the result by turnover.Example: Company X made an operating profit of £500m on a turnover of £3,000m. Profit margin was therefore (500 x 100) / 3000= 16.66%Profit margin tells you about the underlying profitability of a company's trading activities, not whether it is actually making money for shareholders. Note that it is calculated before taking account of interest charges or tax. Gross profit marginGross profit marginGross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. Profit marginProfit marginIndicator of profitability. The ratio of earnings available to stockholders to net sales. Determined by dividing net income by revenue for the same 12-month period. Result is shown as a percentage. Also known as net profit margin. Directly Unproductive Profit-Seeking ActivitiesDirectly Unproductive Profit-Seeking ActivitiesActivities that have no direct productive purpose (neither increasing consumer utility nor contributing to production of a good or service that would increase utility) and are motivated by the desire to make profit, typically from market distortions created by government policies. Examples are rent seeking and revenue seeking. Term coined by Bhagwati (1982). Further SuggestionsExcess profitprofits warning Profit maximizing Unitised with profit endowment Profit sharing plan unitised with profits Realized profit (or loss) Profitability ratios Zero profit Profit taking Book profit profit taking profit before tax Profit margin Profit Profit Range Excess profits tax Profitability index Full with profit endowment net profit Net profit margin Operating profit margin Accumulated profits tax profit sharing scheme pre tax profit |
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