Gross Profit Calculator

Gross Profit

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. 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.

Gross Profit Margin

GP Margin is the percentage of gross profit on sales.


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.


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


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 yea. Or at the close of the period for which these calculations are happening.


Assume a company has recorded sales of $500,000, and its purchases amount to $390,000. The opening and closing stock of the company stands at $40,000 and $50,000, respectively.

Cost of Goods Sold = 40,000 + 390,000 – 50,000 =380,000

Gross Profit = 500,000 – 380,000 = 120,000

Gross Profit Margin = (120,000 / 500,000)*100 = 24%


A stable or consistently increasing gross profit margin helps in determining the improvement in the efficiency of a company. It should be compared with the GP margin of the previous year as well as the GP margin of companies operating in the same industry.

But, the actual efficiency in the functioning of the company cannot be determined using this solely because it does not consider various other costs, such as cost of advertisement, admin costs, etc., which the company incurs for selling its products.

Sanjay Borad

Sanjay Bulaki Borad

Sanjay Borad is the founder & CEO of eFinanceManagement. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".

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