Gross means the total of something. When talking about gross profit, it is the company’s profit after subtracting costs related to the goods and services sold.
The gross profit will show how a company is doing. It is often used to assess the performance of a company.
How to calculate gross profit
To find the gross profit, you subtract the cost of goods sold from the sales revenue. To calculate the gross profit as a percentage, multiply that number by 100 and divide by the sales revenue.
The tax authorities often use the gross profit for an industry or similar to assess whether there may be signs of undeclared sales in a company.