Gross profit and net profit are both key measures of a business’s profitability, but they reflect different stages of financial performance.
Gross profit is the amount remaining after subtracting the cost of goods sold (COGS) from total revenue. It shows how efficiently a business produces or sources its products.
Net profit, on the other hand, is the final profit after all expenses are deducted, including operating costs, taxes, interest, and other expenses. While gross profit focuses on production profitability, net profit reveals the business’s overall financial health. Net profit is also known as the bottom line and appears on the income statement.