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Gross Profit and Gross Profit Margin

income statement
New answer on Apr 27, 2023
5 Answers
1.0 k Views
Anonymous A asked on Jul 28, 2022

Dear all,

going through the income statement part I was wondering why SGA are included in the gross profit and the gross profit margin, since they are part of the OpEx.

I believe what you call Gross Profit in the example should be Operating Profit. (?)

 

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Clara
Expert
Content Creator
replied on Jul 31, 2022
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Yes, and I found that very confusing too. 

At the end of the day, when you case for consulting, it´s clearer than this, since you normally just talk about “margin”, and it´s clear what comes into that metric. 

Cheers, 

Clara

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Cristian
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Content Creator
replied on Jul 31, 2022
#1 rated MBB & McKinsey Coach

Hi there, 

You're right. 

It stands to show that sometimes the answers in case books are wrong, so take them all with a pinch of salt. 

Best,

Cristian

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Ian
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Content Creator
replied on Jul 28, 2022
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

Per investopedia, “Gross profit only includes the costs directly tied to the production facility, while non-production costs like company overhead for the corporate office is not included”

In sum, you are correct :)

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Rodrigo updated an answer on Apr 27, 2023
Supply Chain Director (ex Amazon, P&G) in BCG 2nd round

Hi,

Could you update the content differentiating gross profit from operating profit? 

Currently it is really confusing. 

Best. 

(edited)

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Pedro
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replied on Jul 30, 2022
Bain | Roland Berger | EY-Parthenon | Mentoring Approach | 30% off first 10 sessions in May| Market Sizing | DARDEN MBA

Yes, you are correct.

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Clara gave the best answer

Clara

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McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
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