Please Explain The Math Behind Figuring Gross Profit, And The Difference Between Gross Profit And Mark Up?


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Susan Rothman answered
Gross Profit is when you take all the cash in and cash out in terms of one sale and what's left is what you made. Net Profit is when you take the expenses of the business itself and measure it against the accumulated gross profit and what's left is the Net profit. The math is this: Gross profit is the sales price less the cost of the item that was sold. If you sell an item for $5.00 and it had cost you $2.50, your gross profit is $2.50.

$5.00 - $2.50= $2.50.

Mark-up is the difference from the cost of the item to the sales price. You buy an item for $2.50 and you add an amount to create a price that you want to sell it for. That added amount is called the "mark-up". The amount of "mark-up" equals your gross profit. It is the same. Gross profit=Mark-up.

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