How to Compute Gross Profit

Video Transcript

"This is financial advisor, Patrick Munro, talking about how to compute gross profit. Gross profit is what a company looks at when they initially sell a product in their company. However, the word "gross" means that you have to factor out additional expenses in order to get that product out the door. That may be packaging, it may be staff to deliver the product to its final destination. There may be a component of after sale service that must be added to, or taken away, rather, from the gross profit to result in what's called a net profit. But, computing gross profit is the initial step that every business undertakes when they're doing their profit projections for the tracking of their business going forward for a calendar year. This is financial advisor, Patrick Munro, talking about how to compute gross profit."