Accounting Glossary

How To Calculate Profit

 

Profit (Calculation)

Profit is revenue minus expenses. For gross profit, you subtract some expenses. For net profit, you subtract all expenses.

Gross profits and operating profits are steps on the road to net profits. Net profits are what you truly get to keep.

 

Gross Profit

( graphic )

Revenue – COGS = Gross Profit

 

Operating Profit

Gross Profit – Operating Expenses = Operating Profit

 

Net Profit

Operating Profit – Tax = Net Profit

 

Profits Indicate You’re Earning More Than You Spend:

  • Gross profit shows you’re selling goods and services for more than they cost you
  • Operating profit shows you’re making money after paying expenses other than interest
  • Net profit shows you’re making money after paying all expenses and taxes

 

 

Init popup
aperio-popup