What is net profit?

Net profit is the total amount of profit your business makes after deducting expenses. This includes:

  • the cost of goods sold
  • overhead
  • tax

Net profit is a good way of measuring how profitable your business is. Annual net profit is your net profit for one year.

Net profit is also called net earnings and net income. Because it’s on the last line of an income statement, it’s also known as ‘the bottom line.’

 

Related terms:
How to calculate net profit margin
How do I calculate my net worth?
How to calculate gross profit

Related Xero feature:
Keep track of your numbers with financial reporting

Related Small Business Guide:
How to manage your finances and cash flow

Accounting Terms

Accounting terms and how-tos for beginners. Let us walk you through all the basics that you need know.

What is net profit?

Net profit is the total amount of profit your business makes after deducting expenses. This includes:

  • the cost of goods sold
  • overhead
  • tax

Net profit is a good way of measuring how profitable your business is. Annual net profit is your net profit for one year.

Net profit is also called net earnings and net income. Because it’s on the last line of an income statement, it’s also known as ‘the bottom line.’

 

Related terms:
How to calculate net profit margin
How do I calculate my net worth?
How to calculate gross profit

Related Xero feature:
Keep track of your numbers with financial reporting

Related Small Business Guide:
How to manage your finances and cash flow

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