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What is the difference between gross and net?

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May 15, 2012 8:09AM

Gross and Net

Gross refers to the total and Net refers to the part of the total that really matters.

Gross vs Net Income

In 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 Margin

Gross 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.)