# Gross profit

The gross , gross profit , gross income ( English gross profit ) or gross margin ( English gross margin ) is a financial ratio , the difference between the sales revenue and merchandise or use of material represents. It must be differentiated from the gross profit or loss indicator for the balance sheet .

## General

By comparing sales revenue and cost of sales, gross profit is an absolute key figure that results from the difference between sales revenue and cost of sales. It does not take into account all costs and other income , which is why it is also known as the gross margin . In trading , the percentage of gross profit corresponds to the trading margin . The gross profit can be calculated for any product as a unit, article, article group, product group and product range. The sum of all piece margins results in the operating gross profit or the operating trade margin.

## Items in the profit and loss account

The gross profit is a subtotal that results from the income statement using the total cost method in accordance with Section 275 (2) HGB as follows:

    Position                Gesamtkostenverfahren
nach § 275 HGB
Position 1              Umsatzerlöse
Position 2              +/- Bestandsveränderung
Position 3              + aktivierte Eigenleistungen
= Gesamtleistung
Position 5              - Materialkosten
= Rohertrag


Item 4 (other operating income) is not taken into account in the gross profit. The alternatively applicable cost of sales method knows the gross profit as the subtotal , which is not comparable to the gross profit .

## calculation

There are two levels of gross profit.

### Gross profit I

The so-called "gross profit I" is calculated as follows:

  Umsatzerlöse (brutto)
- Erlösschmälerungen
- Umsatzsteuer
- Wareneinsatz (netto)
-------------------------------------------------
= Rohertrag I


### Gross profit II

The so-called "Gross Profit II" is calculated by including the purchase costs as follows:

  Rohertrag I
- Warenbezugskosten
-------------------------------------------------
= Rohertrag II


## Key figures

Two further key figures can be determined from the gross profit, namely the gross profit ratio and the gross profitability .

${\ displaystyle {\ text {Gross profit ratio}} = {\ frac {\ text {Gross profit}} {\ text {Net operating performance}}} \ cdot 100 \, \%}$
${\ displaystyle {\ text {Gross profitability}} = {\ frac {\ text {Gross profit}} {\ text {Average inventory}}} \ cdot 100 \, \%}$

Both key figures represent profitability figures because they result from the comparison of yield figures with performance or inventory figures . Strictly speaking, the trading margin corresponds to the gross profit ratio, since both are relative percentages.

The gross profit only takes into account the individual costs that are directly attributable to sales . Assuming that the cost of materials and goods is largely identical to the variable costs , the gross profit indicates the maximum fixed costs that can be so that profits can still be made. The gross profit is thus a residual amount from which the entire operating costs must be financed. In trading companies, the gross profit is decisive for measuring operational success. It is a first measure of a company's depth of added value. If the directly attributable personnel costs (such as wages in production such as piece-rate wages ) are subtracted from the gross profit, the contribution margin is a further subtotal :

  Rohertrag II
- Personaleinzelkosten
-------------------------------------------------
= Deckungsbeitrag


## Real estate industry

The real estate industry uses the terms gross profit and net profit when assessing the value of buildings . The gross profit results from the normal market income achievable with proper management and permissible use of a property ( § 2 Paragraph 2 Real Estate Valuation Ordinance 2010). If you subtract the management costs from this gross profit , you get the net profit ( § 18 Paragraph 1 ImmoWertV). Profitability is the generally and sustainably achievable net income with proper and debt-free management with remunerated external workers ( Section 36 (2) BewG).