GROSS PROFITS Meaning and
Definition
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Gross profits refer to the financial outcome derived after deducting the cost of goods sold (COGS) from total revenue. It represents the revenue remaining after accounting for the direct costs associated with the production or acquisition of goods or services. Gross profits serve as a fundamental measure to evaluate the profitability and efficiency of a company's operations.
To calculate gross profits, the COGS, which includes direct materials, labor, and production overheads, is subtracted from the total sales or revenue generated during a specific period. Gross profits do not account for other operating expenses like sales, marketing, or administrative costs, as those are considered indirect costs.
This metric provides insights into the efficiency and pricing of a company's products or services, as well as its ability to control manufacturing and production costs. Increasing gross profits can be achieved through various strategies such as cost optimization, efficient inventory management, and negotiating better prices from suppliers.
Gross profits are essential for evaluating a company's ability to generate revenue above its production costs. However, it does not indicate the overall profitability, as it does not include other expenses or taxes. Hence, it is commonly used in conjunction with other financial metrics, such as net profits, to gain a comprehensive understanding of a company's financial health and performance.
Common Misspellings for GROSS PROFITS
- fross profits
- vross profits
- bross profits
- hross profits
- yross profits
- tross profits
- geoss profits
- gdoss profits
- gfoss profits
- gtoss profits
- g5oss profits
- g4oss profits
- griss profits
- grkss profits
- grlss profits
- grpss profits
- gr0ss profits
- gr9ss profits
- groas profits
- grozs profits
Etymology of GROSS PROFITS
The word "gross" in "gross profits" comes from the Old French word "gros", meaning large or thick. It was later adopted into Middle English, where it came to refer to the entire amount, before deductions or expenses were taken into account.
The term "profits" has its origins in the Latin word "proficere", meaning to make progress or make gain. It was further developed in French as "profit", which entered English in the 14th century and referred to the excess of revenue over expenses.
When combined, "gross profits" refers to the total amount of profit made before any deductions or expenses are subtracted from the revenue received.
Similar spelling words for GROSS PROFITS
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