What is your definition of NET profit and Gross profit

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  • notjoe
    Confirmed User
    • May 2002
    • 5599
    #1

    What is your definition of NET profit and Gross profit

    OK, i think i'm losing my mind here.

    I've always assumed that NET profit was the around of money you have left over once you pay for all you expenses. As for GROSS Profit, that was the money you have before you pay expenses.

    Here's a simple example

    $10,000 Made this month (Gross Profit)
    $5,000 - Expenses

    $5,000 = would be your NET Profit right?


    If that is the case then why does reference.com say otherwise?

    http://dictionary.reference.com/search?q=gross%20profit

    http://dictionary.reference.com/search?q=net%20profit

    Either i need to lay off the pot and take a course in business or this site is wrong..

    So, which is it?
    Tags: None
    • detoxed
      vip member
      • Jan 2003
      • 17798
      #2
      Take an accounting class, everyones definition should be pretty damn near the same.

        Comment

        • Libertine
          sex dwarf
          • May 2002
          • 17860
          #3
          Made: total revenue
          Made after expenses in raw materials (that is, the cost of what you are selling): gross profit
          Made after all expenses: net profit

          So, for instance, you sell books for $25 each. That's your total revenue on them.
          However, you buy them for $10 each, so your gross profit per book is only $15.
          But wait... you need an office, a phone, a company car, etc, and you have to pay your taxes ofcourse. Let's say that averages out on $10 a book. Then, your net profit is $5 per book.
          /(bb|[^b]{2})/

            Comment

            • baddog
              So Fucking Banned
              • Apr 2001
              • 107089
              #4
              okay, it has been many, many years since I took business, but as I recall:

              gross: how much you brought in
              gross profit: how much you brought in, less the cost of what it was you sold
              net profit: how much was left after you deducted all the other expenses over and above the purchase cost of what you sold

              ie:

              you make $500 selling widgets - that is gross

              the widgets cost you $250 - so you have $250 gross profit

              you had to pay commissions of $125 to widget salesmen, $10 to package the widgets, $15 to house the widgets before selling them, and $50 in other various expenses associated with widgets - so you had $50 net profit

              at least that is how I recall it.

                Comment

                • baddog
                  So Fucking Banned
                  • Apr 2001
                  • 107089
                  #5
                  Originally posted by punkworld
                  Made: total revenue
                  Made after expenses in raw materials (that is, the cost of what you are selling): gross profit
                  Made after all expenses: net profit

                  So, for instance, you sell books for $25 each. That's your total revenue on them.
                  However, you buy them for $10 each, so your gross profit per book is only $15.
                  But wait... you need an office, a phone, a company car, etc, and you have to pay your taxes ofcourse. Let's say that averages out on $10 a book. Then, your net profit is $5 per book.
                  cross post - that is what I was saying too . . .. widgets just have a higher profit margin than books

                    Comment

                    • notjoe
                      Confirmed User
                      • May 2002
                      • 5599
                      #6
                      Originally posted by punkworld
                      Made: total revenue
                      Made after expenses in raw materials (that is, the cost of what you are selling): gross profit
                      Made after all expenses: net profit

                      So, for instance, you sell books for $25 each. That's your total revenue on them.
                      However, you buy them for $10 each, so your gross profit per book is only $15.
                      But wait... you need an office, a phone, a company car, etc, and you have to pay your taxes ofcourse. Let's say that averages out on $10 a book. Then, your net profit is $5 per book.

                      i think its time for that course ;) DAMN.. maybe give up the chronic as well!

                      Thanks!
                      Last edited by notjoe; 10-31-2003, 10:40 AM.

                        Comment

                        • Libertine
                          sex dwarf
                          • May 2002
                          • 17860
                          #7
                          Originally posted by baddog


                          cross post - that is what I was saying too . . .. widgets just have a higher profit margin than books
                          ehm... $5 out of $25 is 20%, $50 out of $500 is 10%...
                          /(bb|[^b]{2})/

                            Comment

                            • KC
                              Confirmed User
                              • Jan 1995
                              • 2417
                              #8
                              Originally posted by notjoe
                              OK, i think i'm losing my mind here.

                              I've always assumed that NET profit was the around of money you have left over once you pay for all you expenses. As for GROSS Profit, that was the money you have before you pay expenses.

                              Here's a simple example

                              $10,000 Made this month (Gross Profit)
                              $5,000 - Expenses

                              $5,000 = would be your NET Profit right?


                              If that is the case then why does reference.com say otherwise?

                              http://dictionary.reference.com/search?q=gross%20profit

                              http://dictionary.reference.com/search?q=net%20profit

                              Either i need to lay off the pot and take a course in business or this site is wrong..

                              So, which is it?
                              Talk to a CPA, buy "Accounting for Dummies" or at least do some reading on Intuit's website.. Posting on GFY for help with accounting definitions isn't very wise!

                              Jupiter Hosting, Inc.
                              Vice President, Business Development
                              kc (AT) jupiterhosting.com

                                Comment

                                • baddog
                                  So Fucking Banned
                                  • Apr 2001
                                  • 107089
                                  #9
                                  Originally posted by punkworld


                                  ehm... $5 out of $25 is 20%, $50 out of $500 is 10%...
                                  I told you I had not been to school in many years . . . . besides, I pay higher commissions . . . . just look at Sex Pictures Pass

                                    Comment

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