Gross Profit represents how much money a business keeps for every dollar of revenue it generates after accounting for the direct costs associated with producing its goods or providing its services (also referred to as Cost of Goods Sold or COGS). Gross Profit is a financial metric often analyzed to understand the efficiency and profitability of a company’s core operations. For example, if a company sells products for $1,000,000 and incurs COGS of $600,000, its Gross Profit is $400,000. This figure does not account for other operating expenses like overhead, marketing, or administrative costs. Business owners often track Gross Profit to assess changes in production costs and pricing strategies.