Question

Is gross profit or net profit more important to consider when you're deciding how successful and profitable a company is? Why? Explain. (1-3 sentences.)

Answer 1

Answer:

Net profit

Explanation:

Gross profit is the profit made after deducting costs associated with making and selling its products, or the costs associated with providing its services. Net profit is the profit after deducting all operating expenses, interest, taxes and preferred stock dividends. While both are important, net profit is can be more significant in determining how successful a company is as it also considers all overhead expenses not factored into the gross profit.

Answer 2

Net profit is more important to consider because it accounts for all the costs associated with making and selling the product and it includes the operating expenses that are excluded from gross profit.