What is the formulas of profit and loss?
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The formula of profit or loss
Gross profit formula: Gross profit = Revenue – Cost of goods sold (COGS)
Where:
- Revenue is the total amount of money received from the sale of goods or services, and
- COGS is the cost of the goods sold, including direct materials, direct labor, and manufacturing overhead.
Net profit formula: Net profit = Revenue – (COGS + Operating expenses + Taxes)
Where:
- Operating expenses are the costs incurred in running the business, such as rent, utilities, marketing, and administrative costs, and
- Taxes are the amounts paid to the government as per the applicable tax laws.