Gross Profit
The dollar amount remaining after subtracting the cost of goods sold from revenue, before operating expenses and other costs are deducted.
Gross profit is calculated as revenue minus cost of goods sold, and it’s the raw dollar figure underlying the gross margin percentage, showing how much money is left to cover operating expenses and eventually produce a profit.
A business can have growing gross profit in dollar terms while its gross margin percentage shrinks, or vice versa, which is why lenders often review both the dollar amount and the percentage together.
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