What remains after calculating the difference between revenue and cost of goods sold?

The calculation that results from subtracting the cost of goods sold from revenue is known as gross profit. This figure represents the earnings a company makes from its core business activities before accounting for operating expenses, taxes, and other costs not directly tied to the production of goods or services. It is a key indicator of the efficiency of a company in managing its production costs relative to its sales revenue.

Gross profit provides insight into how well a company generates profit from its direct production activities. Understanding this metric is essential for assessing the gross profitability of a business and helps in evaluating pricing strategies, cost control measures, and operational efficiency.

In the context of business analysis, gross profit serves as a foundational measure from which other profitability metrics, such as operating income and net income, are derived. Thus, while those metrics involve further deductions for operational expenses, gross profit remains focused exclusively on revenue generated from sales minus the costs incurred in producing those sales.