Gross Profit

What is the meaning / definition of Gross Profit in the hospitality industry?

Gross Profit is the profit a company makes after deducting the costs of production (or the costs that allow the services to take place) from the net sales amount. Gross Profit is also called sales profit, sales credit or gross income. It only takes into account variable costs and disregards fixed costs such as building rent, marketing expenses, salaries etc.

Gross Profit will appear on a companyโ€™s income statement and is a companyโ€™s profit before operating expenses, interest payments and taxes. It can be calculated as below:

Formula:

Gross Profit = Revenue โ€“ Cost of Goods Sold

See Also:

Synonyms:

  • Sales Profit
  • Sales Credit
  • Gross Income

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About the Author: Patrick Landman

As CEO and Founder of XOTELS, Patrick Landman has made it his mission to turn hotels and resorts into local market leaders. XOTELSยด diverse expertise and deep-knowledge across revenue management consulting, hotel management, and hotel consulting, enables us to drive results for independent boutique hotels, luxury resorts, and innovative lodging concepts. Below you will find opinion articles written by Patrick Landman.