GP or Gross Profit is the excess of sales over the cost of goods sold. Cost of goods sold means the cost incurred by the company in producing the goods sold. This simply implies that it does not consider the cost of goods that are still in stock of the company. This gross profit calculator is for simplifying these calculations.
Gross profit is the earnings made by the company at the gross level and Gross Profit Margin is the percentage of gross profit on sales. For instance, a company producing and selling pencils would arrive at a gross profit by deducting the cost of material used in it, wages paid, and expenses for producing goods from its sales. However, it will not consider the administrative and marketing costs. GP only includes costs spent till the production stage.
The formula to calculate the gross profit is as follows:
Gross Profit = Sales – Cost of Goods Sold
Cost of Goods Sold (COGS) = Opening Stock + Purchase + Direct Expenses – Closing Stock
And the formula for calculating gross profit margin is:
Gross Profit Margin = (Gross Profit/Sales) * 100
Gross Profit Calculator
How to Calculate Using Calculator?
Enter the following figures into the gross profit ratio calculator to arrive at gross profit and gross profit margin.
Sales – Here sales mean net sales. Net sales mean cash plus credit sales less sales returns, if any.
Opening Stock – Opening stock means stock available at the beginning of the year
Purchases – Enter the amount of purchases made by the company during the year.
Direct Expenses – Provide the amount of direct expenses into the calculator.
Closing Stock – It refers to the stock of goods available with the company at the end of the year. Or at the close of the period for which these calculations are happening.