Net Profit Calculator
Calculate your net profit and net profit margin — the true bottom line after every cost, including COGS, operating expenses, interest, and taxes. See how much of each dollar you actually keep.
What Is Net Profit?
Net profit — also called net income or "the bottom line" — is what remains after every expense has been subtracted from revenue. It is the final profit figure on an income statement and the number that flows into retained earnings on the balance sheet.
Net profit is the most honest measure of business performance. Gross profit can look healthy while a business is losing money if overheads, debt interest, or taxes are too high. Net profit shows whether the whole business is actually profitable.
Net Profit Formula
Net Profit = Revenue − Total Expenses − Interest − Taxes
Net Margin = (Net Profit ÷ Revenue) × 100
Net profit can also be calculated step by step through the income statement:
- Gross Profit = Revenue − COGS
- Operating Profit (EBIT) = Gross Profit − Operating Expenses
- Net Profit = Operating Profit − Interest − Taxes
Gross vs Operating vs Net Profit
The three profit figures are cumulative. Each one subtracts a larger set of costs from revenue, so the numbers get smaller as you move down the income statement.
- Gross profit subtracts only direct production costs (COGS). Shows whether the product is profitable.
- Operating profit also subtracts day-to-day operating expenses like rent, salaries, marketing. Shows whether the business runs efficiently.
- Net profit also subtracts interest on debt and income taxes. Shows whether shareholders actually make money.
Worked Example
A business has $100,000 revenue, $75,000 total expenses, $5,000 interest, and $8,000 tax:
Gross profit = $100,000 − $75,000 = $25,000
Operating profit = $25,000 − $5,000 = $20,000
Net profit = $20,000 − $8,000 = $7,000
Net margin = ($7,000 ÷ $100,000) × 100 = 7%
For every dollar of sales, the business keeps 7 cents after paying everything.
Frequently Asked Questions
What is a good net profit margin?
It varies by industry. Retail and grocery often run 2–5%. Manufacturing is 5–10%. Services and professional firms run 10–20%. Software and financial services can exceed 20–30%. Net margins above 20% are excellent for almost any industry.
What is the difference between net profit and net income?
They are the same thing. "Net profit", "net income", and "the bottom line" all mean revenue minus every expense including taxes. Some countries prefer one term over the other, but the calculation is identical.
Can net profit be negative?
Yes. A negative net profit is a net loss. The business spent more than it earned. A loss is not always fatal — start-ups and businesses in growth mode often run losses deliberately — but a sustained net loss without a clear path to profit is a serious warning sign.
Does net profit include dividends?
No. Dividends are paid out of net profit after it has been calculated. Net profit is what remains for shareholders as a group; dividends are how the company chooses to distribute part of that to individual shareholders.
Why is net profit different from cash flow?
Net profit is an accounting figure based on when revenue is earned and expenses are incurred, not when cash actually moves. A profitable business can run out of cash if customers pay slowly or inventory is overstocked. That is why cash flow statements exist alongside the income statement.
How do I increase net profit?
There are only four levers: increase revenue (higher prices, more volume), reduce COGS, reduce operating expenses, or reduce interest and taxes (refinance debt, use available deductions). The fastest gains usually come from price increases and cutting low-ROI operating costs, not from chasing more sales.