How to Define Gross Profit

Video Transcript

"In this clip we will define gross profit. When a, when we engage in business affairs, one of the important things we have to do is measure that business in order to determine whether we make a profit and continue in business. The gross profit is the basic revenue of the business less the direct cost of creating that business. For example, if we sell socks in a retail store; the sales of those socks are the revenue of the business, the cost to purchase those socks to have them available is the cost of sales. The difference between the revenue and the cost of sales is the gross profit."