**Q: If net revenue equals $50,000, cost of sales $20,000 and operating expenses $10,000, then what does the gross profit come to?**

A:

First of all let's look at what we need. We need to find the

Gross profit is just below sales and cost of sales .

The formula for gross profit is:

Do we have sales and cost of sales to work this out?

Yes, we do!

You see, revenue and sales are the same thing. Net revenue is the same thing as net sales. Net sales is simply sales less sales returned.

So we simply do:

$50,000 - $20,000 = $30,000

So the gross profit comes to

In this case we have to consider what happens on the income statement after we have gross profit. We next have

Out of this we can work out a formula:

Net profit = Gross profit + Other income - Operating expenses

And from this we get:

= $50,000 - $0 + $10,000

= $60,000

So in this case (working the income statement backwards) our gross profit comes to

- Michael Celender

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