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Net Profit Formula:
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Net Profit is the actual profit after all expenses have been deducted from total revenue. It represents the final amount of money a business has earned after accounting for all costs, taxes, and operating expenses.
The calculator uses the Net Profit formula:
Where:
Explanation: This fundamental accounting formula calculates the bottom line of a business, showing what remains after all financial obligations are met.
Details: Net Profit is crucial for assessing business profitability, making investment decisions, securing financing, and strategic planning. It indicates the overall financial health and sustainability of an enterprise.
Tips: Enter total revenue and all expenses in your preferred currency. Both values must be non-negative numbers. The calculator will compute the net profit instantly.
Q1: What's the difference between gross profit and net profit?
A: Gross profit is revenue minus cost of goods sold, while net profit deducts all operating expenses, taxes, interest, and other costs from gross profit.
Q2: Can net profit be negative?
A: Yes, when expenses exceed revenue, it results in a net loss (negative net profit), indicating the business is operating at a loss.
Q3: What expenses are included in "All Expenses"?
A: All Expenses include operating costs, salaries, rent, utilities, taxes, interest payments, depreciation, and any other business-related costs.
Q4: How often should net profit be calculated?
A: Businesses typically calculate net profit monthly, quarterly, and annually for financial reporting and performance analysis.
Q5: Why is net profit important for investors?
A: Net profit shows a company's ability to generate returns, pay dividends, and grow, making it a key metric for investment decisions.