Divide gross profit by sales for the gross profit margin, which is 40%, or $40,000 divided by $100,000. Profit describes the financial benefit realized when revenue generated from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity in question. As a result, net profit is often different from net cash […]

After calculating the company’s gross revenue, all operating costs are subtracted to arrive at the company’s operating profit, or earnings before interest, taxes, depreciation, and amortization (EBITDA). If the company’s only overhead was a monthly employee expense of $5,000, its operating profit would be $3,000, or ($8,000 – $5,000). Like accounting profit, economic profit deducts […]