Gross Profit
Short definition
Gross profit is revenue less cost of goods sold. It is the spread between selling price and direct cost; it excludes opex, interest and tax.
Detailed explanation
What sits in COGS — materials, direct labour, manufacturing overhead, depreciation, freight — depends on the sector and costing policy. In trading, COGS is mainly purchase cost and inventory movement; in manufacturing, production cost and volume variance move gross profit.
Inflation and FX move price and COGS at different speeds. Inventory method (FIFO, weighted average) shifts gross profit across periods; that accounting effect is not the cash margin.
Why it matters for the CFO
Pricing, mix and commodity-hedge decisions show up first in gross profit. Defending operating profit by cutting opex while gross profit erodes is not a run-rate; cash can still leave through inventory and receivables in the same period.
How it is calculated
Brüt kâr = Satış gelirleri − Satışların maliyeti (COGS)
Net revenue minus COGS. Rebates and returns hit revenue; inventory change hits COGS.
Variables in the formula
- GP: Gross profit
- Revenue: Revenue
- COGS: Cost of goods sold
How to read it
The cash amount is volume × unit margin; a larger amount is not an improvement unless the margin rate is read with it. Low utilisation inflates unit COGS via fixed production cost. Discounts and returns are gross-profit leakage hidden in net sales.
Numerical example
Net sales 400 mn TL, COGS 260 mn TL → gross profit = 400 − 260 = 140 mn TL.
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Definitions are educational. They are not investment, credit or tax advice.