Calculate the gross profit and profit margin by entering your sales and the cost of goods, you will then automatically get the results.
How To Calculate Gross Profit
Gross Profit = Total Sales – Cost of Goods
Gross Profit Margin = Gross Profit divided by Total Sales then x 100
Example of finding the gross profit from £100 total sales and £30 cost of goods:
Gross Profit = 100 minus 30 = 70
Gross Profit Margin = 70 divided by 100 = 0.7 x 100 = 70%
What Is Gross Profit?
The gross profit is the total sales of the goods minus the total cost of the goods sold.
When calculating the total sales the business must add up all goods sold over the chosen financial time. This total must only be sales generated from sales of its stock and not be from fixed assets for example, a building.
To calculate the costs of goods sold the business adds all costs involved in selling the goods. These are variable costs, which may fluctuate such as; staff wages, cost of buying the stock, store utilities etc.
Fix costs like rent is not included when calculating the cost of goods sold.