Gross Profit

How to read it

Gross profit is revenue less the direct cost of producing what the company sold, as the company reports it on its income statement. It rises when sales grow or when the cost of making and delivering each sale falls, and it shrinks when input costs, discounts or a weaker product mix eat into what is left. Because it sits above operating expenses, it shows what the core product earns before overhead, research and marketing. stockrow shows it for the trailing twelve months, for quarters and for years, and statement tables show it in millions.

What is typical

The size of gross profit relative to revenue depends heavily on the kind of business. Software, branded goods and other businesses with low production costs keep a large share of each sale, while retailers, distributors and makers of commodity products keep a much thinner share. Gross profit feeds Gross Margin and Gross Profit Growth, which make companies easier to compare than the raw amount; compare those with the sector medians rather than judging the amount alone.

Pitfalls

Companies draw the line between cost of sales and operating expenses differently, so two firms with similar economics can report different gross profit. Some businesses, such as banks, report no meaningful cost of sales at all. A single quarter can swing with seasonal sales, so the trailing-twelve-month figure is steadier for comparisons.