Profit Definition: Gross, Operating, and Net Profit Explained
What is the relationship between gross profit and operating profit?
Operating profit is a company's total revenue minus its operating expenses, which include things like cost of goods sold, wages, raw materials, and other associated costs. Gross profit, on the other hand, is a company's total revenue minus the cost of goods sold. The difference between the two is that gross profit does not take into account any of the other associated costs that go into running the company. What is meant by gross profit and net profit? Gross profit is the difference between revenue and the cost of goods sold. Net profit is the difference between revenue and all expenses.
What are the 4 types of profit? 1. Net income: This is the most common type of profit and is simply the total revenue of a company minus the total expenses.
2. Operating profit: This is a measure of a company's profitability from its core operations, and is calculated as revenue minus operating expenses.
3. Pre-tax profit: This is a company's total profit before taxes are deducted, and is calculated as revenue minus all expenses (including non-operating expenses).
4. After-tax profit: This is a company's profit after taxes have been deducted, and is calculated as pre-tax profit minus taxes.