Glossary

With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.

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Gross Profit

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Category: Accounting and Finance

Definition:

An accounting term that refers to the difference between a company’s total revenue from sales and its cost of goods sold (COGS). It represents the amount of money available to cover operating expenses and generate a profit before considering other costs such as selling, general, and administrative expenses (SG&A), interest, and taxes. The formula for calculating gross profit is: Gross Profit = Revenue – Cost of Goods Sold (COGS). It’s important to note that while gross profit is an important measure of profitability at the gross margin level, net profit (also known as net income or profit after tax) provides a more comprehensive view of a company’s overall profitability after considering all expenses, including operating expenses, interest, and taxes.