Accounting Glossary

How To Calculate Net Profit

 

Net Profit (Calculation)

Net profit is gross profit minus operating expenses and taxes. You can also think of it as total income minus all expenses.

 

Example Of A Net Profit Calculation

Let’s say your business sells €20,000 worth of products, and it costs you €8000 to make them. With additional operating expenses of €3000 and taxes of €4000, the calculation would go like this.

Net profit is the money you get to hold onto. The number comes last on the profit and loss statement, which is why it’s called the bottom line. The net profit can be paid out to owners or reinvested in the business.

 

See related terms
Financial statement
Fiscal year
More terms

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