Gross profit
Gross profit is revenue less cost of sales. It measures the trading surplus before other operating expenses, other income, financing and income taxes. Gross profit margin expresses gross profit as a percentage of revenue. Gross profit differs from final profit and from cash generated; credit sales and inventory movements can produce different profit and cash effects.
Worked example
Revenue of 1,000 less cost of sales of 600 gives gross profit of 400.
Common mistake
Calling gross profit the final profit after all expenses and tax.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | F2 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |