Valuation Terms

Gross Profit

Revenue minus the direct cost of providing the product or service. Why it matters: Gross profit shows how much money is available to cover overhead after direct costs, making it an important clue about pricing power and operational efficiency.

Related terms

Revenue

The total money the business brings in before expenses. Why it matters: Buyers look at revenue trends, customer mix, and repeatability to understand whether the business is growing, shrinking, or dependent on a few sources.

More from Valuation Terms

Add-Backs Adjusted EBITDA CapEx Cash Flow EBITDA Enterprise Value Equity Value Free Cash Flow Gross Margin Multiple Net Income Net Working Capital

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