Explain Net Profit

Question

Give a brief introduction of the term Net Profit?

Answer 1

Net Profit or Operating Profit Net profit , as well termed as operating profit is real earnings of the company in a given era of time. It is a measure of the productivity after accounting for all costs. In easy terms, net profit is the money left over subsequent to paying all the expenditures including interest and taxes. It is the computed by subtracting total expenditures from sum total revenues. Net income can be also allocated between shareholders of the company or held through the firm as retained earnings for the prospect purposes.

Net Profit = Gross Profit – Total Operating Expenses – Taxes – Interest