Net Profit Formula, How to calculate Net Profit

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


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
Interest & Taxes (EBIT)

OR, Profit before
Interest & Taxes(PBIT)

Less : Interest 40
Earning before Taxes (EBT)

OR, Profit before Taxes (PBT)

Less : Taxes 40
Net Profit 100


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Tax Shastra is a knowledge-sharing platform for Individuals, Businesses & Professionals, solely managed and guided by Ratan Sarraf, where you can learn your taxes and finance easily.

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2 Comments on “Net Profit Formula, How to calculate Net Profit”

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