Which of the following is essential for calculating the gross profit?

Calculating gross profit is fundamentally tied to understanding the relationship between total sales revenue and the direct costs associated with producing goods or services, known as the cost of sales (or cost of goods sold). Gross profit is derived from the formula:

Gross Profit = Total Sales Revenue - Cost of Sales.

The cost of sales includes the direct costs incurred in the production of the goods sold by a company. This is crucial because it reflects the company's efficiency in producing goods while generating revenue from their sales.

Total sales revenue is indeed relevant to the calculation of gross profit, but it is the cost of sales that is necessary to determine how much profit remains after accounting for the costs of producing the goods sold.

Operating expenses and interest paid are not included in the gross profit calculation. Operating expenses are considered when calculating operating profit, while interest is accounted for separately when determining net profit. Thus, the emphasis on cost of sales in calculating gross profit is paramount, highlighting its essential role in evaluating a company's profitability at the gross level.