Gross profit

Definition

As a percentage of turnover it is the gross margin and the single most informative figure in trade: it says how much room is left for staff, rent and profit. A trading business on a fifteen per cent margin has to work differently from one on fifty.

In a service business the figure is less useful because material costs are small. Value added per employee takes its place there.

What the software must be able to do

Check whether the software calculates gross profit per item, per job and per customer, and not just as a total. Without a purchase price per item this is impossible — so the question becomes whether purchase prices are maintained at all.

Checked Aug 2026

More terms under Bookkeeping and retention: Accrual principle Accrued liabilities Annual accounts Association accounting Balance sheet Balance sheet total Book value Break-even point Business assets Business expenses Cash book Cash flow statement Cash receipts Contribution margin Cost centre Current assets Debit and credit Depreciation Double-entry bookkeeping Duty to keep accounts EBIT EBITDA Equity Equity ratio Financial year Fixed assets Fixed costs Foreign currency General ledger Hidden reserves Income statement Inventory count Journal Journal entry Liabilities Liquidity Loss carry-forward Membership dues Net profit Opening balance sheet Overheads Pass-through item Prepaid expenses Provision Record-keeping ordinance Reserves Retained profit Simple accounts Swiss SME chart of accounts Tamper resistance Turnover Value adjustment Variable costs Volunteer-run structure Voucher Year-end closing modules