Gross profit is an important profit measure for companies that sell inventory because it shows the profit left from net sales after the cost of inventory sold has been deducted.

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Gross profit is defined as the difference between net sales and cost of goods sold (COGS). It only takes into account the direct costs associated with the production and sale of goods or services, and does not include any other indirect expenses. As such, it is a good measure of a company's ability to generate profits from its core operations.

Gross Profit Is an Important Profit Measure for Companies That