Net profit

Net profit, refers to the amount remaining after deducting all costs and expenses of a company or individual from their total income. Thus, it represents the effective profit earned by an entity after deducting all costs incurred to carry out its activities.

Calculate net profit

To calculate net profit, first all income of the business or individual is added up, such as sales revenue, interest income and other sources of income. Then all expenses and costs associated with running the business are subtracted, such as operating expenses, taxes, depreciation and interest charges on loans. The amount remaining after these deductions is net profit. This figure is an important measure of a company's financial health and profitability. A positive net profit indicates that the company earned more than it spent, while a negative net profit indicates that expenses exceeded revenues. Net profit is essential for investors, shareholders and management to understand the actual profitability of a company.