Gross profit is the difference between a company's revenue from sales and the cost of goods sold (COGS). It reflects how efficiently a business produces and sells its products. Gross profit is an important measure because it shows how much money is left over to cover operating expenses, taxes, and other costs after accounting for the direct costs of production. Calculating gross profit helps businesses assess their profitability and pricing strategies. A higher gross profit indicates that a company is effectively managing its production costs, while a lower gross profit may signal the need for adjustments in pricing or cost management.