Final answer:
The student's question is about calculating the gross profit for an investor, which is the difference between total revenue and cost of goods sold. It is essential for investors to know the gross profit to assess a business's profitability. Maeve calculates this by subtracting the COGS from the total revenue of her boutique.
Step-by-step explanation:
The question pertains to a financial metric called gross profit, which is a key indicator of a company's financial health and is particularly crucial information for potential investors. Gross profit is calculated by subtracting the cost of goods sold (COGS) from the total revenue generated from sales. To calculate the gross profit, Maeve would use the formula:
Gross Profit = Total Revenue - Cost of Goods Sold
For example, if Maeve's boutique had a total revenue of $100,000 and the cost of goods sold was $60,000, then the gross profit would be:
Gross Profit = $100,000 - $60,000 = $40,000
This figure helps investors to evaluate the profitability of the business before making investment decisions. The difference between revenue and COGS reflects the efficiency of the production and pricing strategies of the business. A positive gross profit is indicative of the potential for profitability and sustainability of Maeve's boutique.