Gross profit (or gross income) defines the value of the products and services sold by a business before factoring in the cost of goods sold. If the gross profit is a negative number, it is instead called a gross loss. It contrasts with “net profit,” which describes the actual profit earned after accounting for those costs.Gross margin is a related term: It specifies the value of the organization’s net sales, minus the cost of goods sold. Net sales are calculated by correcting gross sales for adjustments such as discounts and allowances.
