Gross Profit (GP) Formula, How to calculate Gross Profit

Definition of Gross Profit :
Gross Profit is defined as Net Sales minus Cost of Goods Sold.
It is also referred to as Gross Margin.
Formula :
Gross Profit = Sales – Cost of Goods Sold (COGS)
COGS = Opening Stock + Purchases – Closing Stock
Gross Profit = Sales – (Opening Stock + Purchases – Closing Stock)
Gross Profit = Sales – Opening Stock – Purchases + Closing Stock
Gross Profit = Sales + Closing Stock – Opening Stock – Purchases
**Purchases (For Trading Business) = Goods/Stock Purchased + Carriage Inward
**Purchases (For Manufacturing Business) = Raw Materials + Variable Expenses
# Variable Expenses = Direct Labour , Freight, Packaging, Etc.

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