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Gross Loss( 毛亏损 )

Gross Exposure

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What is Gross Exposure?

Gross exposure refers to the absolute level of a fund's investments. It takes into account the value of both a fund’s long positions and short positions and can be expressed either in dollar or percentage terms. Gross exposure is a measure that indicates total exposure to financial markets, thus providing an insight into the amount at risk that investors are taking on. The higher the gross exposure, the bigger the potential loss (or gain).

Understanding Gross Exposure

Gross exposure is an especially relevant metric in the context of hedge funds, institutional investors, and other traders, who can short and long assets and use leverage to amplify returns. These types of investors are sometimes more sophisticated and have greater resources than regular, long-only investors.

As an example, hedge fund A has $200 million in capital. It deploys $150 million in long positions and $50 million in short positions. The fund's gross exposure is thus: $150 million + $50 million = $200 million.

Since gross exposure equals capital in this case, gross exposure as a percentage of capital is 100%. If gross exposure exceeds 100%, it means the fund is using leverage — in other words, it is borrowing money to amplify returns. Alternatively, gross exposure below 100% indicates a portion of the portfolio is invested in cash.

Key Takeaways

  • Gross exposure measures an investment fund's total exposure to financial markets, including long and short positions and use of leverage.
  • A higher gross exposure means that the fund has a greater amount at stake in the markets.
  • Gross exposure is an especially relevant metric in the context of hedge funds, institutional Gross Loss( 毛亏损 ) investors, and other traders, who can short and long assets and use leverage to amplify returns.

Gross Exposure Vs. Net Exposure

The exposure of an investment fund can also be measured in net terms. Net exposure equals the value of long positions, minus the value of short positions.

For example, the net exposure of hedge fund A is $100 million. This is calculated by subtracting $50 million, the amount of capital tied up in short positions, from the $150 million of long holdings.

If net exposure is the same as gross exposure, it means the fund only has long positions. On the other hand, if net exposure is zero, it means the percentage invested in long positions equals investment in short positions, also known as a market neutral strategy.

A fund has a net long exposure if the percentage amount invested in long positions exceeds the percentage amount invested in short position. Likewise, it has a net short position if short positions exceed long positions.

Assume hedge fund B also has $200 million in capital but uses a significant amount of leverage. As a result, it has $350 million in long positions and Gross Loss( 毛亏损 ) $150 million in short positions. The gross exposure in this case is thus $500 million (i.e. $350 million + $150 million), while the net exposure is $200 million (i.e. $350 - $150 million).

Gross exposure as a percentage of capital for Gross Loss( 毛亏损 ) hedge fund B = $500 million ÷ $200 million = 250%. Fund B's higher gross exposure means that it has a greater amount at stake in the markets than A. Fund B's use of leverage will magnify losses, as well as profits.

Special Considerations

Gross exposure is generally used as the basis for calculating a fund's management fees, since it takes into account total exposure of investment decisions on both the long and short side. Portfolio managers combined decisions will have direct consequences on the performance of a fund and thus distributions to its investors.

An additional method of calculating exposure is a beta-adjusted exposure, also used for investment funds or portfolios. This is computed by taking the weighted average exposure of a portfolio of investments, where the weight is defined as the beta of each individual security.

Meaning of gross loss in English

the total amount of Gross Loss( 毛亏损 ) a company’s losses from its different activities in a particular period, even if it makes a profit on some of these activities:Gross Loss( 毛亏损 )

(Definition of gross loss from the Cambridge Business English Dictionary © Cambridge University Press)

Examples of gross loss

If one gets Gross Loss( 毛亏损 ) the manufacturer's permission, one can do what one likes—sell at what price one likes, at a net loss or a gross loss.

Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3.0

Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3.0

Example from the Hansard archive. Contains Parliamentary information licensed under the Gross Loss( 毛亏损 ) Open Parliament Licence v3.0

The gross loss of cash in transit from armed robbery in 1999 was less than £0.01 billion compared to our £2 billion to £4 billion.

Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Gross Loss( 毛亏损 ) Licence v3.0

Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3.0

Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3.0

Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3.0

The gross loss involved is 21 acres, but he worked it out for us that the net loss would be only four acres.

Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3.0

These examples are from corpora and from sources on the web. Any opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of Cambridge University Press or its licensors.

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Gross Profit

The Gross Profit (GP) of a business is the accounting result obtained after deducting the cost of goods sold and sales returns/allowances from total sales revenue. GP is located on the Gross Loss( 毛亏损 ) income statement (sometimes referred to as the statement of profit and loss) produced by a company and used to determine a company’s gross margin. Below is an example:

Gross Profit

Formula for Calculating Gross Profit

The gross profit formula is:

Gross Profit = Sales Revenue – Cost of Goods Sold

As of the first quarter of business operation for the current year, a bicycle manufacturing company Gross Loss( 毛亏损 ) has sold 200 units, for a total of $60,000 in sales revenue. However, it has incurred $25,000 in expenses, for spare parts and materials, along with direct labor costs. There were also returns and allowances for a total of $1,000. As Gross Loss( 毛亏损 ) a result, the gross profit declared in the financial statement for Q1 is $34,000 ($60,000 – $1,000 – $25,000).

What is Sales Revenue?

Sales revenue or net sales is the monetary amount obtained from selling goods and services to customers – excluding merchandise returned and any allowances/discounts offered to customers. This can be realized either as cash sales or credit sales.

What is Cost of Goods Sold?

Cost of goods sold, or “cost of sales,” is an expense incurred directly Gross Loss( 毛亏损 ) Gross Loss( 毛亏损 ) by creating a product. It includes any raw materials and labor costs incurred. However, in a merchandising business, cost incurred is usually the actual amount of the finished product (plus shipping cost, if any) purchased by a merchandiser from a manufacturer or supplier. In Gross Loss( 毛亏损 ) any event, cost of sales is properly determined through an inventory account or a list of raw materials or goods purchased.

Gross Margin

Gross profit serves as the financial metric used in determining the gross profitability of a business operation. It shows how well sales cover the direct costs related to the production of goods.

The formula for calculating gross margin is:

Gross Margin Gross Loss( 毛亏损 ) = Gross Profit / Total Revenue x 100

Gross margin is expressed as a percentage. For example, a company has revenue of $500 million and cost of goods sold of $400 million; therefore, their gross profit is $100 million. To get the gross margin, Gross Loss( 毛亏损 ) divide $100 million by $500 million, which results in 20%.

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Additional Resources

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Gross vs Net

Gross means the total or whole amount of something, whereas net means what remains from the whole after certain deductions are made. For example, a company with revenues of $10 million and expenses of $8 million reports a gross income of $10 million (the whole) and net income of $2 million (the part that remains after deductions). This guide will compare gross vs. net in a business context.

Gross vs Net

Examples of Gross Items

In finance and accounting, there are many items in the financial statements that are referred to as gross.

  • Gross Assets – The value Gross Loss( 毛亏损 ) of assets before any deductions
  • Gross Revenue – All revenue before any items are netted out (e.g., refunds and returns)
  • Gross Profit – Profit margin after only deducting cost of sales or cost of goods sold – Gross profit divided by revenue, showing gross profit as a percentage

Examples of Net Items

There are also many instances of net items that appear in financial statements.

  • Net Assets – The value of assets after certain liabilities are deducted
  • Net Revenue – Revenue after refunds, returns, or other items are deducted
  • Net Earnings – The bottom line that remains after deducting all expenses from revenues – Same as net earnings – Net income divided by revenue, showing net income as a percentage of

Gross vs Net Calculator

Let’s work through two examples that were listed above and calculate the various gross vs net amounts.

Assets: A company owns land worth $5 million, Gross Loss( 毛亏损 ) a building worth $2 million, and has a $4 million mortgage. The gross asset value is $7 million ($5 million + $2 million) and the net asset value is $3 million ($5 million + $2 million – $4 million).

Income: The same company reports rental income of $1 million per year, interest payments of $200,000, salaries of $250,000, and taxes of $100,000. The gross income is $1 million. The net income is $450,000 ($1 million – $200,000 – $250,Gross Loss( 毛亏损 ) 000 – $100,000).

Gross vs Net - Calculator Example

Download CFI’s Excel calculator to input your own numbers and calculate different values on your own. As you’ll see in the file, you can easily change the numbers or add/remove rows to change the items that are included in the calculation.

Gross vs Net in Conversations

The terms gross and net are used frequently in accounting and finance conversations. The easiest way to know what someone means is to think about what could naturally be deducted from something.

For example, if someone says, “Our company made $30 million last year in our online division.”, you may want to ask them, “Gross or net?”. If Gross Loss( 毛亏损 ) they say gross, they probably mean either revenue or gross profit (you may need to ask for further clarification). If they say net, you may assume it’s net income (after all expenses are deducted), but you may still need to ask for clarification, as they could be thinking only of operational expenses (which excludes interest and taxes), or they might be including all items.

Unfortunately, as you can see in the example above, it is sometimes ambiguous what someone means when they say “gross” or “net”, so further clarification may be required. The only way to know for sure what someone means is to ask them exactly what is included and/or what is deducted from the figure.

Additional Resources

Thank you for reading this guide to understanding what gross vs net means in a business financial context. To continue learning and advancing your career, these additional CFI resources will be useful: