How does one determine the gross profit or the net profit?

When the goods revenue is compared with the goods expenditure, the gross profit arises, which covers the general expenditure. Based on this, the net profit can be calculated.

The gross profit represents an important reference in relation to the assessment of the pricing and cost policy of a company.

General expenditure is the expense that arises without direct connection to a specific goods transaction, common for all goods, such as personnel costs, administrative costs, energy costs, depreciations, or space costs. To calculate the net profit, the general expenditure has to be deducted from the profit. Thus, in a two-step income statement, it represents an intermediate result:

Goods revenue (1000) - Goods expenditure (200) = Gross profit (800)

Gross profit (800) - Personnel expenditure (300)- Administrative expenditure (50) - Energy expenditure (20) - Deprecation costs (10) - Other expenditure (40)= Net profit (380)