Turnover - cost of goods sold =

• A. Gross Profit
• B. Turnover
• C. Net Cash Flow
• D. Net Profit

Answer: (A)

Subtracting the cost of goods sold from turnover gives gross profit. Turnover is the total revenue from sales in the period, and the cost of goods sold are the direct costs tied to producing those goods (materials, direct labour, etc.). So turnover minus COGS shows how much money is left from trading after covering the direct production costs, which is gross profit. This is different from net profit (which subtracts operating expenses and other costs) and from net cash flow (which looks at cash movements). Turnover itself is the revenue, not the leftover after costs.