Question

what is the difference between gross profit and net profit???

Answer 1

A:Gross profit marginandnet profitmarginare two separateprofitability ratiosused to assess a company's financial stability and overall health.Profit marginis a percentage measurement of profit that expresses the amount a company earns per dollar of sales. Obviously, if a company makes more money persale, it has a higher profit margin.The gross profit margin showstotal revenueminus the cost of goods (the amount it cost the company to produce the goods or services that itsold, commonly referred to ascost of goods sold, or COGS). The calculation to arrive at gross profit margin is:Gross profit margin = (Revenue - Cost of Goods) ÷ Revenue = Gross Profit ÷ RevenueFor the year ended December 31, 2016, Dunkin' Brands Group, Inc. (DNKN), the holding company of Dunkin' Donuts and Baskin-Robbins, reported a total revenue of $828.89 million and COGS of $148.61 million.DNKN's gross profit margin is:($828.89 - $148.61) ÷ $828.89 = 82.07%This means that for every dollar DNKN generates in sales, $0.18 is used to cover the cost ofinventory, and $0.82 is available to cover basicoperating expenses. A higher ratio isusually preferred as this would indicate that the company is selling inventory for a higher profit. Gross profit margin provides a general indication of a company's profitability, but it is not a precise indication.




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Answer 2

Explanation:

Gross profit refers to a company's profits earned after subtracting the costs of producing and distributing its products. Net income indicates a company's profit after all of its expenses have been deducted from revenue.