Gross vs Net – What’s the Difference?

Accountancy Resources

Gross vs Net – What’s the Difference?

Economy Author: Admin


MeaningGross refers to the total amount before anything is deducted. Many important accounting statistics use this method, such as gross earnings and gross profit.Net refers to the amount remaining after certain adjustments have been made for debts, deductions, or expenses.
Gross vs Net IncomeGross income is the pre-tax net sales minus the cost of sales.
Also called Gross Profit.
Net income is what remains after subtracting all the costs (namely, business, depreciation, interest, and taxes) from a company’s revenues. It is sometimes called the bottom line.
Also called earnings or net profit.
Gross vs Net MarginGross margin is gross income divided by net sales, expressed as a percentage. It reveals how much a company earns taking into consideration the costs that it incurs for producing its products and/or services. It is a good indication of how profitable a company is at the most fundamental level. Companies with higher gross margins will have more money left over to spend on other business operations, such as research and development or marketing.Net margin is net profit divided by net revenues, often expressed as a percentage. This number is an indication of how effective a company is at cost control. The higher the net margin is, the more effective the company is at converting revenue into actual profit. The net margin is a good way of comparing companies in the same industry, since such companies are generally subject to similar business conditions. However, the net margins are also a good way to compare companies in different industries in order to gauge which industries are relatively more profitable.
Also called net profit margin.
Additional Comparisonsgross dividend per share 

gross domestic product

gross earnings

gross estate

gross income multiplier

gross investment

gross investment in real estate

gross lease

gross national product

gross pay

gross proceeds

gross profit

gross profit margin

gross real estate investment value

gross revenue pledge

gross sales

gross yield

net dividend per share 

net domestic product

net earnings

net estate

net income multiplier

net investment

net investment in real estate

net lease

net national product

net pay

net proceeds

net profit

net profit margin

net real estate investment value

net revenue pledge

net sales

net yield