Gross Profit
Overview
Below is a business-focused explanation of the Gross Profit report, written for practical use in Dafater.
Gross Profit Report – Business Overview
What Business Information This Report Provides
The Gross Profit report shows how much profit your business earns from sales before operating expenses such as salaries, rent, or marketing. It compares sales revenue against the cost of goods sold (COGS) to calculate:
- Gross Profit value
- Gross Profit percentage
This report helps you understand how profitable your products, customers, or sales channels are at the core trading level.
When and Why to Use This Report
You should use the Gross Profit report when you want to:
- Evaluate the profitability of products or services
- Monitor margins across different customers or regions
- Review sales performance over a specific period
- Identify low-margin or loss-making sales
- Support pricing, discount, or cost-control decisions
It is especially useful during:
- Monthly or quarterly performance reviews
- Pricing strategy discussions
- Sales team performance evaluations
- Management and board reporting
Key Columns and Their Business Meaning
Common columns in the Gross Profit report include:
Sales Invoice
Identifies the specific sales transaction used in the calculation.Posting Date
Shows when the sale was recorded, helping analyze profit over time.Customer
Indicates which customers are contributing the most (or least) profit.Item / Item Group
Shows profitability at a product or product-category level.Selling Amount
The total revenue earned from the sale.Cost Amount
The cost incurred to deliver the product or service.Gross Profit
The actual profit made from the sale
(Selling Amount – Cost Amount)Gross Profit %
Shows how much of the sales value is retained as profit.
A higher percentage indicates better pricing or cost efficiency.
Available Filters and Their Business Purpose
Typical filters help you focus the report on what matters most:
Date Range
Analyze profit for a specific month, quarter, or year.Company
Useful when managing multiple business entities.Customer / Customer Group
Identify high-value or low-margin customers.Item / Item Group
Understand which products or categories are driving profit.Sales Person / Sales Team
Evaluate sales performance based on profitability, not just revenue.Territory
Compare margins across regions or markets.
These filters allow management to drill down into specific profit drivers or problem areas.
How to Interpret the Results for Business Decisions
High Gross Profit %
Indicates strong pricing power or efficient cost management.
These items or customers are good candidates for growth and promotion.Low or Negative Gross Profit
Signals pricing issues, high costs, or excessive discounts.
Requires immediate review.Inconsistent Margins Across Customers
May indicate non-standard pricing or negotiation gaps.Margin Decline Over Time
Could be due to rising costs, competitive pressure, or uncontrolled discounts.
Management can use these insights to:
- Adjust selling prices
- Renegotiate supplier costs
- Revise discount policies
- Focus sales efforts on more profitable segments
Common Use Cases and Scenarios
Product Profitability Review
Decide which products to promote, improve, or discontinue.Customer Profit Analysis
Identify customers who generate revenue but low profit.Sales Strategy Planning
Shift focus from high-volume, low-margin sales to better-margin deals.Budget and Forecast Validation
Check if actual margins align with planned targets.Audit and Control
Detect abnormal costs or pricing inconsistencies.
Summary
The Gross Profit report in Dafater is a critical management tool that goes beyond sales figures. It helps decision-makers understand where the business truly makes money, enabling smarter pricing, cost control, and strategic growth decisions.
Report Information
- Module: Accounts
- Related DocType: Sales Invoice
- Report Type: Script Report
- Standard: Yes