ACCOUNTING GLOSSARY
Gross Profit
Gross Profit
Revenue minus cost of goods sold.
What does Gross Profit mean?
Revenue minus cost of goods sold. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Gross Profit in context
Revenue of $1 million less $650,000 COGS results in $350,000 gross profit.
Why it matters in financing
Gross Profit can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related accounting terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.