Gross profit and net profit are both key indicators of a business’s financial health, but they measure different aspects of profitability.
Gross profit is the revenue remaining after deducting the cost of goods sold (COGS), such as production and material costs. It shows how efficiently a company produces and sells its products. The formula for gross profit is:
Gross Profit = Revenue - Cost of Goods Sold (COGS).


Net profit, on the other hand, is the total profit after all expenses have been subtracted, including operating costs, taxes, interest, and other non-operating expenses. It represents the overall profitability of a company. The formula for net profit is:
Net Profit = Gross Profit - Operating Expenses - Taxes - Interest.

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