Which of the following best defines gross profit?

Gross profit is defined as the total revenue generated from sales minus the cost of goods sold (COGS), which is often referred to as the cost of sales. This calculation reflects the basic profitability of a company's core business activities before deducting other expenses such as operating expenses, taxes, and interest. By focusing solely on the costs directly associated with producing goods or services, gross profit provides insight into how efficiently a company is producing its products.

Understanding gross profit is essential for evaluating a business's financial health because it highlights the balance between sales and the costs put into creating those sales. This information can be used by business owners and stakeholders to make informed cost management and pricing decisions.

In contrast, the other options provided do not accurately reflect the concept of gross profit. For instance, net profit includes additional factors beyond production costs, which makes it different from gross profit. Total income from investments refers to returns on investments, which is not directly related to sales revenues and costs. Lastly, the sum of sales revenue and returns does not capture the expense side of the equation, which is essential in determining gross profit.