Gross Profit Quick Question

MoneyQ: 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:
This question is not as hard as it seems, but it's testing your knowledge of the income statement (also known as the profit and loss). If you know the format of the income statement, then this question is not so hard.

First of all let's look at what we need. We need to find the
gross profit . Where is the gross profit on the income statement? How do we calculate it?

Gross profit is just below
sales and cost of sales .

The formula for gross profit is:
Sales - cost of sales = gross profit

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:

Net revenue - cost of sales = gross profit
$50,000 - $20,000 = $30,000


So the gross profit comes to
$30,000 .

Alternative Gross Profit Question & Answer to Really Test You

Now let's say for a second we have the same example above but the "net revenue" is actually "net profit."

In this case we have to consider what happens on the income statement after we have gross profit. We next have
other income (if a business actually has made some other income) and operating expenses and we finally get to net profit or net revenue (same thing).

Out of this we can work out a formula:

Net profit = Gross profit + Other income - Operating expenses

And from this we get:

Gross profit = Net profit - Other income + Operating expenses
= $50,000 - $0 + $10,000
= $60,000


So in this case (working the income statement backwards) our gross profit comes to
$60,000 .

- Michael Celender

Comments for Gross Profit Quick Question

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Hi
by: Anonymous

Net Revenue = $50,000
Cost of Sales (Cost of Goods Sold/COGS) = $20,000
Operating Expenses = $10,000

To calculate Gross Profit:

Net Revenue - Cost of Sales = Gross Profit

So:

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

Operating expenses is not involved in this calculation.

Now, you can calculate the Gross Profit Percentage which is simply:

Gross Profit /(divided by) Net Sales *(multiply) 100

So:

$30,000 / $50,000 = 0.6 * 100 = 60%

just trying
by: Anonymous

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

just trying: 50000-20000-10000=20000


this is wrong caliculation
by: Anonymous

revenue 50000
cost of good sold 20000
gross profit 30000
operating expence 10000

Gross profit margin 10000
by: Anonymous

Revenue :50000
Cost :30000
G.P :10000
O.Exp. :10000
NO NP :-----0

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