How To Calculate Gross Profit

Last Updated on August 16, 2023 by Jake Sheridan

In this tutorial, you will learn how to calculate gross profit in Google Sheets

How To Calculate Gross Profit in Google Sheets

Gross profit is an important financial metric that businesses use to measure the profitability of their business. It is the total amount of money a business made from sales after deducting the cost of goods sold.

For example, if a company sold $2500 worth of products and the cost of goods sold was $1000, then the gross profit is $2500 – $1000 = $1500. This indicates that the company was able to make a profit of $1500 on their sales.

The cost of goods sold or COGS can include a variety of different expenses. As long as the expenses are directly contributing to the production of a service, they are marked as production costs and fall under COGS.

It is important to note that gross profit does not consider any other costs or expenses. For example, taxes, administrative and marketing costs are omitted from this calculation.

In this guide, we will show you how to calculate gross profit in a Google Sheets spreadsheet.

How To Find Gross Profit in Google Sheets

Here’s how to find gross profit in Google Sheets.

Step 1

First, we’ll have to identify the total revenue the company earned in a given time frame, such as a year.

In this example, our company had a total annual revenu of $100,000.

Step 2

Next, we must identify the COGS or cost of goods sold. The COGS expense may include labor costs related to production, factory overhead, packaging and shipping, materials, and storage.

In our example, our business spent $65,000 in direct production costs. Do note that COGS does not include fixed costs or expenses. For example, COGS does not account for marketing expenses, executive salaries, rent, or other administrative costs.

Step 3

We can find the gross profit by subtracting the COGS expense from the total revenue.

In our example, we’ve calculated that our company earned a gross profit of $35,000.

Summary

This guide should be everything you need to calculate gross profit in Google Sheets.

You may make a copy of this example spreadsheet to test it out on your own.