Definition of Net Profit :
Simply, Net Profit is an organisation’s revenue that remains after all business expenses.
Net profit is the measurement of a company’s profit once operating costs, taxes, interest and depreciation have all been subtracted from its total revenues.
Formula :
Net Profit = Gross Profit – Operating Expenses – Interest – Taxes
OR,
Net Profit = Sales – Cost of Goods Sold (COGS) – Operating Expenses – Interest – Taxes
| Income Statement | Amount | Amount |
| Sales/Revenue | 1000 | |
| Less : COGS | 700 | |
| Gross Profit | 300 | |
| Less : Operating Expenses | ||
| Salaries | 80 | |
| Rent | 20 | |
| Depreciation | 5 | |
| Maintenance | 15 | 120 |
| Operating Profit
OR, Earning before OR, Profit before |
180 | |
| Less : Interest | 40 | |
| Earning before Taxes (EBT)
OR, Profit before Taxes (PBT) |
140 | |
| Less : Taxes | 40 | |
| Net Profit | 100 |
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