How do you calculate gross profit based on the net profit?

You do need to subtract expenses while calculating gross profit. There are formulas to calculate the % of gross profit and net profit. To calculate the gross profit percentage: (Revenue-Goods sold)/Revenue*100. To calculate the net profit percentage: (Net Income/Revenue)*100.

Before we move over to the formulae and calculation, we need to understand what gross profit and net profit EXACTLY show in your financial statements:



Net profit refers to your total income/revenue after deducting all expenses (G.P. - expenses). The formula for calculating net profit is:

Net Profit = Gross profit - Operating Expenses + Other Income



On the contrary, Gross profit refers to a company's profit before subtracting expenses.



Now let's move forward to the main question: How do you calculate gross profit from net profit?



You can easily calculate your gross profit from net profit by reversing this formula the other way around. Here's the mathematical expression at your disposal:

Gross Profit = Net Profit - Cost of Goods Sold



To calculate gross profit percentage or gross profit margin, use this formula:

Gross Profit Margin = [Gross Profit ÷ Net Sales] x 100



Bonus Tip:

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Calculating gross profit based on your net profit is pretty straightforward. It is only a matter of subtracting the COGS from the total revenue. The mathematical expression is as follows:

Gross profit = Net profit - COGS (cost of goods sold)

As for your query, you won't have to deduct the expenses beforehand as the net profit considers all the expenses and taxes.