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Information about Gross Profit

Gross profit or sales profit or gross operating profit is the difference between revenue and the cost of making a product or providing a service, before deducting overheads, payroll, taxation, and interest payments.

In general, it is the profit shown on a transaction if one disregards the indirect costs. It is the revenue that remains once one deducts the costs that arise only from the generation of that revenue.

For a retailer, gross profit is the shop takings less the cost of the goods sold. For a manufacturer, the direct costs are the costs of the materials and other consumables used to make the product. For example, the cost of electricity to operate a machine is often a direct cost while the cost of lighting the machine room is an overhead. Payroll costs may also be direct if the workforce is paid a unit cost per manufactured item. For this reason, service industries that sell their services by time units often treat the fee-earners' time cost as a direct cost.

Gross profit is an important guide to profitability but many small businesses fail because they overlook the regular demand to meet the fixed costs of the business. The indirect costs are considered when calculating net income, another important guide to profitability.

See also

Revenue is a business term for the amount of money that a company receives from its activities in a given period, mostly from sales of products and/or services to customers.
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Overhead may be:
  • Overhead (business), the ongoing operating costs of running a business
  • Engineering overhead, ancillary design features required by a component of a device

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Please help [ improve this article] by expanding this section.
See talk page for details. Please remove this message once the section has been expanded. (tagged since January 2007)
In a company, payroll
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Economic policy
Monetary policy
Central bank   Money supply
Fiscal policy
Spending   Deficit   Debt
Trade policy
Tariff   Trade agreement

Finance
Financial market
Financial market participants
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This article has been tagged since February 2007.
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For the television series, see Profit (TV series)
Profit generally is the making of gain in business activity for the benefit of the owners of the business.
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A transaction is an agreement, communication, or movement carried out between separate entities or objects, often involving the exchange of items of value, such as information, goods, services and money.
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Fixed costs are expenses whose total does not change in proportion to the activity of a business, within the relevant time period or scale of production. For example, a retailer must pay rent and utility bills irrespective of sales to be considered part of fixed costs, but
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Retailing consists of the sale of goods or merchandise, from a fixed location such as a department store or kiosk, in small or individual lots for direct consumption by the purchaser.[1] Retailing may include subordinated services, such as delivery.
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Manufacturing (from Latin manu factura, "making by hand") is the use of tools and labor to make things for use or sale. The term may refer to a vast range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw
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Materials are physical substances used as inputs to production or manufacturing. Materials range from man made synthetics such as many plastics to natural materials such as copper or wood.
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Variable costs are expenses that change in proportion to the activity of a business. In other words, variable cost is the sum of marginal costs. Along with fixed costs, variable costs make up the two components of total cost.
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The workforce is the labour pool in employment. It is generally used to describe those working for a single company or industry.
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Economic systems

Ideologies and Theories
Primitive communism
Capitalist economy
Corporate economy
Fascist economy
Laissez-faire
Mercantilism
Natural economy
Social market economy
Socialist economy
Communist economy


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Profitability is a technical analysis term used to compare performances of different trading systems or different investments within one system. The following definition was published in the journal Technical Analysis of Stocks & Commodities Magazine:[1]
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A small business may be defined as a business with a small number of employees. The legal definition of "small" often varies by country and industry, but is generally under 100 employees in the United States while under 50 employees in the European Union (In comparison, the
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Fixed costs are expenses whose total does not change in proportion to the activity of a business, within the relevant time period or scale of production. For example, a retailer must pay rent and utility bills irrespective of sales to be considered part of fixed costs, but
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Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Net income can be distributed among holders of common stock as a dividend or held by the firm as retained earnings.
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Gross margin is an ambiguous phrase that expresses the relationship between gross profit and sales revenue. The ambiguity arises because it can be expressed in absolute terms:

Or as the ratio of gross profit to sales revenue, usually in the form of a percentage:
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Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
:EBITDA = Operating Revenue – Operating Expenses + Other Revenue

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