Gross Profit

Gross Profit is a core indicator in foreign trade finance, referring to the balance after subtracting the Cost of Goods Sold (COGS) from sales revenue, reflecting the initial profitability of a company's core business. In foreign trade scenarios, sales revenue is typically the invoice amount under trade terms such as FOB/CIF, while COGS includes direct costs such as procurement costs, production expenses, domestic freight, customs clearance fees, international freight, insurance, and tariffs. Gross Profit is used to quickly assess the profitability of orders or products, and is commonly used in quotation decisions, product line optimization, and salesperson performance evaluation. Note: Gross Profit does not deduct selling expenses, administrative expenses, financial expenses, or taxes, so it cannot be equated with Net Profit; moreover, cost composition varies under different trade terms, so comparisons should use a consistent basis. The difference from Net Profit is that Gross Profit only considers direct costs, while Net Profit requires deducting all indirect expenses and taxes. Foreign trade practitioners should regularly calculate Gross Profit to avoid actual profit shrinkage due to exchange rate fluctuations, changes in tax rebate policies, or rising freight costs.