Net profit

This refers to the excess of revenues over all expenses, but before financing costs and tax charges, commonly referred to as EBIT (earnings before interest and tax).

Net profit is typically lower than gross profit as it takes account of all indirect and overhead costs.  In financial reporting, net profit can be calculated before or after extraordinary items (rare) and before or after tax, depending on context.

Net Profit Formula

Net profit is a term normally found in financial reporting and financial management.

Explore our learning zone to discover more