Information about Net Profit
Net profit is an accounting term which is commonly used in business. It is equal to the gross profit minus overheads minus interest payable plus one off items for a given time period.
A common synonym for "net profit" when discussing financial reports (which include a balance sheet and an income statement) is the bottom line. This term results from the traditional appearance of an income statement which shows all allocated revenues and expenses over a specified time period with the resulting summation on the bottom line of the report. Generally speaking, this term is synonymous with Pre-tax Profit.
In simplistic terms, net profit is the money left over after paying all the expenses of an endeavor. In practice this can get very complex in large organizations or endeavors. The bookkeeper or accountant must itemise and allocate revenues and expenses properly to the specific working scope and context in which the term is applied.
Definitions of the term can however vary between the UK and US. In the US Net Profit is often associated with Net income or Profit after tax (see table below).
The net margin percentage is a related ratio. This figure is calculated by dividing net profit by turnover, and it represents profitability, as a percentage.
Here is how you reach net profit on a P&L (Profit & Loss) account:
Sales Revenue = Price (of product) X Quantity
Gross profit = sales revenue – cost of sales and other direct costs
Operating profit = Gross profit – overheads and other indirect costs
Pre-tax profit or Net profit = operating profit + one off items and redundancy payments, staff restructuring – interest payable
Profit after tax = Pre-tax profit – tax
Retained or Net profit = Profit after tax – Dividends
A common synonym for "net profit" when discussing financial reports (which include a balance sheet and an income statement) is the bottom line. This term results from the traditional appearance of an income statement which shows all allocated revenues and expenses over a specified time period with the resulting summation on the bottom line of the report. Generally speaking, this term is synonymous with Pre-tax Profit.
In simplistic terms, net profit is the money left over after paying all the expenses of an endeavor. In practice this can get very complex in large organizations or endeavors. The bookkeeper or accountant must itemise and allocate revenues and expenses properly to the specific working scope and context in which the term is applied.
Definitions of the term can however vary between the UK and US. In the US Net Profit is often associated with Net income or Profit after tax (see table below).
The net margin percentage is a related ratio. This figure is calculated by dividing net profit by turnover, and it represents profitability, as a percentage.
Here is how you reach net profit on a P&L (Profit & Loss) account:
Sales Revenue = Price (of product) X Quantity
Gross profit = sales revenue – cost of sales and other direct costs
Operating profit = Gross profit – overheads and other indirect costs
Pre-tax profit or Net profit = operating profit + one off items and redundancy payments, staff restructuring – interest payable
Profit after tax = Pre-tax profit – tax
Retained or Net profit = Profit after tax – Dividends
See also
Accountancy (profession) or accounting (methodology) is the measurement, statement or provision of assurance about financial information primarily used by managers, investors, tax authorities and other decision makers to make resource allocation decisions within companies,
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Gross profit or sales profit or gross operating profit is the difference between revenue and the cost of making a product or providing a service, before deducting overheads, payroll, taxation, and interest payments.
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Financial statements (or financial reports) are formal records of a business' financial activities. These statements provide an overview of a business' profitability and financial condition in both short and long term.
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In formal bookkeeping and accounting, a balance sheet is a statement of the book value of all of the assets and liabilities (including equity) of a business or other organization or person at a particular date, such as the end of a financial year.
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An Income Statement, also called a Profit and Loss Statement (P&L), is a financial statement for companies that indicates how Revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed
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Bottom line may refer to:
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- ESPN sports scores and news (ESPN BottomLine).
- the bottom line, or net income, the income that a firm has after subtracting costs and expenses from the total revenue
- Bottom Line (band), a rock band from Cincinnati, Ohio.
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Bookkeeping (book-keeping or book keeping) is the recording of all financial transactions undertaken by an individual or organization. The organization may be a business, a charitable organization or even a local sports club.
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Accountant, or Qualified Accountant, or Professional Accountant, is a certified accountancy and financial expert in the jurisdiction of many countries. Such as other legally-restricted professions including medical doctors and lawyers, different countries have their
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Profit margin, Net Margin or Net Profit Ratio all refer to a measure of profitability. It is calculated using a formula and written as a percentage or a number.
Margin is mostly used for internal comparison.
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Margin is mostly used for internal comparison.
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In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1]
EBIT = Operating Revenue – Operating Expenses + Non-operating Income
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EBIT = Operating Revenue – Operating Expenses + Non-operating Income
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Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
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- :EBITDA = Operating Revenue – Operating Expenses + Other Revenue
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Gross income is commonly defined as the amount of a company's or a person's income before all deductions or any taxpayer’s income, except that which is specifically excluded by the Internal Revenue Code, before taking deductions or taxes into account.
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Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Net income can be distributed among holders of common stock as a dividend or held by the firm as retained earnings.
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