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Finance

Should amortization be deducted from sales for the calculation of gross profit?

Guest Writer
Entrepreneur, Business Planner and Angel Investor
min read
Opinions expressed by Entrepreneur contributors are their own.
I'm used to the term gross margin rather than gross profit. You subtract only the cost of sales, also called direct costs, or unit costs . . . those things that go up and down with sales.

Some special industries include amortization as direct costs, like rental business--but that's rare.

And then some people talk about gross profit as gross margin less expenses. In that case, amortization, which is an expense, would count.

Tim

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