In accounting, profit is the difference between the purchase and
the component costs of delivered goods and/or services and any
operating or other expenses. There are several important profit
measures in common use. Note that the words earnings, profit and
income are used as substitutes in some of these terms (also
depending on US or UK usage), thus inflating the number of
profit measures. - Gross profit equals sales revenue minus cost
of goods sold (COGS), thus removing only the part of expenses
that can be traced directly to the production or purchase of the
goods. Gross profit still includes general (overhead) expenses
like R&D, S&M, G&A, also interest expense, taxes and
extraordinary items. - Earnings Before Interest, Taxes,
Depreciation, and Amortization (EBITDA) equals sales revenue
minus cost of goods sold and all expenses except for interest,
amortization, depreciation and taxes. It measures the cash
earnings that can be used to pay interest and repay the
principal. Since interest is paid before incom