Question

In March, XYZ Company had revenue of $1,000, cost of goods sold of $200, and income tax expenses of $100. What is XYZ's gross profit for March?

Answer 1

XYZ Company's gross profit for March is $800, calculated by subtracting the cost of goods sold ($200) from the revenue ($1,000).

Step-by-step explanation:

Gross profit is calculated by subtracting the cost of goods sold (COGS) from revenue. In this case, the revenue is $1,000, and the COGS is $200. Therefore, the formula for gross profit is: Gross Profit = Revenue - COGS. Plugging in the numbers, we get $1,000 - $200 = $800.

Revenue represents the total income generated from sales, while COGS accounts for the direct costs associated with producing the goods sold. Gross profit is a key financial metric that reflects the profitability of a company's core business operations before deducting other expenses.

Understanding and analyzing gross profit is crucial for assessing a company's operational efficiency and profitability. It provides insight into how well a company is generating profit from its primary activities, excluding external factors such as taxes and other operating expenses.