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How to calculate Gross profit

The Gross profit formula, with plain worked examples you can check yourself.

Gross profit = Revenue − COGS

Worked examples

Revenue = 900 · COGS = 630Gross profit = 270
Revenue = 200 · COGS = 80Gross profit = 120
Revenue = 400 · COGS = 160Gross profit = 240

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Bookkeeping Basics.

Related terms

Gross profitInvoiceFiscal yearAccrual accountingRetained earningsLedger

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