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Gross profit: You want to sell a product at a retail level. You first find a supplier. The item you want to sell for example is a new type of water filter. You want to sell it as a mail order item and only one model is available. The wholesaler puts a suggested retail price on it so that everyone sells it for the same price. The retail price lets say is $249.95 each and your cost is only $49.95 each plus shipping and handling. Shipping and handling is an extra $10.00 each. Your total cost is now $59.95. If you sell them at full retail price your GROSS profit is $190.00 . Net profit: I call this my bottom line (true cost) Now we have to take into account our other costs that are not part of our cost in purchasing the item from our supplier. Some of the other costs may seem small but all have be added up to figure out your net profit. I will try to list most of the costs you may incur. Keep in mind , different business situations may have different costs. For our little filter business our costs will be handling and shipping (this is often charged to recover some or all of costs from the supplier) This is one of your largest costs in mail order. Rent: If you rent space to carry on your business, this can also be a considerable cost. If you hire people to help you and if you want to advertise your product, your cost will grow. These are the larger cost items. There are many small ones that you shoud not loose track of though because they add up. Examples are: your own travel costs. a business phone, printing , packing material, insurance stationery, and the cost to cover any warranty on the product. These costs can be controlled by you to some degree and will improve your "bottom line" So now you have taken all of these costs away from your gross profit. Is there anything left? If there is a balance, now you have your NET PROFIT. Try in invest a large portion of your net profit into more inventory to help your business grow, and remember the cost of that add in the news paper. it costs the same to sell one water filter or one hundred. Keep your costs down and the net profit up.
Wiki User
∙ 15y ago
Wiki User
∙ 11y agoGross means, before including expenses in the calculation. Net means, expenses have been included in the calculation (income minus expenses). Actually, "profit" also implies "net", so the correct term would be "gross income", not "net profit".
Wiki User
∙ 12y agoGross profit is the total amount taken in. Net profit is the amount left after all costs and expenses involved are taken out.
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What is the Difference between Gross profit Net profit?
Gross Profit = Sales - Cost of Sales and Direct cost Net Profit = G.P - Indirect Expenses By Cyril Joseph
Why is there a difference between net and gross profit?
Gross profit is the total amount of money that you get. And net profit is the amount left after you subtract your costs. For example, if you sold a toy on Ebay for 100.oo dollars. Your gross profit would be 100. You spent 30 dollars on the items and 6 dollars to list on ebay. subtract your expenses from you gross profit and then that is your NET Profit.
What is the difference between a gross profit and net income?
Gross profit is the total money you made. Net income is what is left of that money after you pay all your expenses: Heat, light, employee salaries, insurance, etc.
Which is better gross profit or net profit?
net profit
What is the difference between Gross Revenue and Gross Profit?
Gross revenue is the total sales/income from the primary business activity. Gross profit is Net Sales minus Cost of Goods Sold. Look at a multiple-step income statement for clarification.
Gross profit and net profit?
Gross and Net profit are virtually the same. They both calculate EBT, earnings before taxes - all overhead and salaries.
What is the Difference between Gross profit Net profit?
Gross Profit = Sales - Cost of Sales and Direct cost Net Profit = G.P - Indirect Expenses By Cyril Joseph
What called The difference between net sales and cost of goods sold divided by net sales?
1. Net sales - cost of goods sold = Gross profit Gross profit / Net sales = Gross profit ratio
What is the difference between gross margin and net profit?
Gross Margin = (Gross Profit/Sales)*100 Gross Profit = Revenue - Cost of Sales Net Profit = Revenue - Expenses Or in words, the Gross Margin is an expression of the Gross Profit as a percentage of Sales, where the Gross Profit is Sales minus the Cost of Sales. The Net Profit, on the other hand, is Revenue minus ALL Expenses (including cost of sales).
Why is there a difference between net and gross profit?
Gross profit is the total amount of money that you get. And net profit is the amount left after you subtract your costs. For example, if you sold a toy on Ebay for 100.oo dollars. Your gross profit would be 100. You spent 30 dollars on the items and 6 dollars to list on ebay. subtract your expenses from you gross profit and then that is your NET Profit.
What is the difference between a gross profit and net income?
Gross profit is the total money you made. Net income is what is left of that money after you pay all your expenses: Heat, light, employee salaries, insurance, etc.
What is the difference between gross profit and profit?
for this answer, I have used "ULTIMATE BOOK OF ACCOUNTANCY"Ans : Gross Profit is Total Profit earned by a business.... whereas profit means net profit,it means .. Gross Profit - Indirect expenses + indirect incomes = profit or net profitFor more detail .. please see... "ULTIMATE BOOK OF ACCOUNTANCY" published by vishvas publications....
Which is better gross profit or net profit?
net profit
Gross vs net income?
Gross and NetGross refers to the total and Net refers to the part of the total that really matters.Gross vs Net IncomeIn accounting, for a P&L (profit and loss statement, Gross profit, or Gross income, 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. Net profit is equal to the gross profit minus overheads minus interest payable plus one off items for a given time period.Gross Margin vs Net MarginGross margin is the ratio of gross profit to revenue. Net margin is the ratio of net profit to revenue.Gross is the profit from the transaction without deduction. Net is the profit from the transaction after deducting cost of goods and cost of the sale (manpower, taxes, rent, etc.)
What is the difference between Gross Revenue and Gross Profit?
Gross revenue is the total sales/income from the primary business activity. Gross profit is Net Sales minus Cost of Goods Sold. Look at a multiple-step income statement for clarification.
How do you calculate profit margins?
Gross Profit Margin = Gross Profit/Revenues Net Profit Margin = Net Profit/Revenues
How do you calculate net sales when gross margin is known?
Gross margin (also known as gross profit) is the difference between Net sales and Cost of goods sold: Net sales - Cost of goods sold = Gross margin Therefore, if you know Gross margin, add it to Cost of goods sold to get Net sales.
