Learn in the textbookFundamentals of Profit and Loss Calculation
DefinitionGross profit (粗利益) is sales (売上高) minus the cost of sales (売上原価); its formal name is gross profit on sales (売上総利益).
ExplanationIt is the first level of profit worked out on the income statement, showing how much was earned from buying and selling or making the goods themselves. Gross profit as a share of sales is the gross profit margin (売上総利益率), used to compare earning power across products or periods.
AnalogyBuy a used book for 200 yen and sell it for 500 yen, and the 300-yen difference is the gross profit.
Memory hookThe 粗 in 粗利益 means "rough" or "approximate", so think of it as the rough first profit before the finer deductions are made.