From the Learn Hub
Learn Hub
Gross profit definition
The money a business makes from selling its products or services, minus the direct costs of making or delivering them.
What is gross profit?
Gross profit is the money a business makes from selling its products or services, minus the direct costs of making or delivering them. It’s a handy way to see how profitable a company’s core operations are before things like rent, salaries, and taxes come into play.
How to calculate gross profit
Gross profit = revenue – cost of goods sold
For example, if a bakery sells £10,000 worth of cakes in a month and spends £4,000 on ingredients and baking costs, its gross profit is £6,000. The higher the gross profit, the more money a business has to cover other expenses – and, ideally, turn a profit in the end!
Investing glossary
It's important you know
Capital at risk. All investing should be for the longer term. The value of your investments can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future.
A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to age 57 from 2028). Tax treatment depends on individual circumstances and may be subject to change in the future.