Gross profit is the profit a company makes after deducting the costs associated with producing and selling its products or the costs associated with its services. In Portfolio123, we distinguish between two versions of gross profit calculations: GrossProfit and GrossProfit_GAAP. The latter incorporates depreciation and amortization into the cost of goods sold (COGS), reflecting a more comprehensive measure of production costs under Generally Accepted Accounting Principles (GAAP).
The choice between using GrossProfit and GrossProfit_GAAP depends on the analytical needs of users focusing on trading systems and investment strategies. GrossProfit provides a direct measure of profitability excluding depreciation and amortization, ideal for analyzing operational efficiency. GrossProfit_GAAP, by including these non-cash expenses, offers a more conservative view of profitability, aligning closer with GAAP standards and potentially providing a more realistic assessment of long-term investment sustainability.
Formulas:
Sales - CostG for GrossProfit
Sales - CostG_GAAP for GrossProfit_GAAP