What is the difference between gross profit and net profit?

by garret_hahn , in category: Taxation and Accounting , 9 months ago

What is the difference between gross profit and net profit?

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1 answer

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by juston , 9 months ago

@garret_hahn 

Gross profit is the revenue generated from sales minus the cost of goods sold (COGS). It represents the profit a company makes after deducting the direct costs directly associated with producing the goods or services it sells.


On the other hand, net profit is the remaining profit after deducting all expenses, including COGS, operating expenses, interest, and taxes from gross profit. It reflects the overall profitability of a company and includes all costs, both direct and indirect, associated with running the business.


In summary, gross profit represents the initial profit before taking into account operating expenses, while net profit represents the final profit after deducting all expenses.