Net profit, also referred to as the bottom line, net income, or net earnings is a measure of the profitability of a venture after accounting for all costs. In a survey of nearly 200 senior marketing managers, 91 percent responded that they found the "net profit" metric very useful. In accounting, net profit is equal to the gross profit minus overheads minus interest payable for a given time period (usually: accounting period).
A common synonym for "net profit" when discussing financial statements (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.
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 profit margin percentage is a related ratio. This figure is calculated by dividing net profit by revenue or turnover, and it represents profitability, as a percentage.
Read more about Net Profit: Purpose, Construction
Famous quotes containing the words net profit, net and/or profit:
“Hard times accounted in large part for the fact that the exposition was a financial disappointment in its first year, but Sally Rand and her fan dancers accomplished what applied science had failed to do, and the exposition closed in 1934 with a net profit, which was donated to participating cultural institutions, excluding Sally Rand.”
—For the State of Illinois, U.S. public relief program (1935-1943)
“You have been trapped in the inescapable net of ruin by your own want of sense.”
—Aeschylus (525–456 B.C.)
“Human development is a form of chronological unfairness, since late-comers are able to profit by the labors of their predecessors without paying the same price.”
—Alexander Herzen (1812–1870)