The total profit of a business after deducting all expenses, taxes, and costs from total revenue. Also called the bottom line or net income.
Net profit is the ultimate measure of a company's profitability. It accounts for all business costs including COGS, operating expenses, depreciation, interest, and taxes. Net profit margin (net profit as a percentage of revenue) tells investors how much of each rupee in revenue translates to actual profit.
Revenue ₹10,00,000 − COGS ₹4,00,000 − Operating Expenses ₹3,00,000 − Interest ₹50,000 − Taxes ₹70,000 = Net Profit ₹1,80,000 (18% net margin).
Ensures accurate financial reporting and record-keeping
Helps maintain regulatory and tax compliance
Enables better-informed business decisions
Improves operational efficiency and cash flow management
It varies by industry. Technology: 15–25%. Manufacturing: 5–10%. Retail: 2–5%. Professional services: 15–30%. Consistently positive net profit margin above industry average is ideal.
No. Net profit includes non-cash items like depreciation and accrued revenue. A company can show net profit but still have cash flow problems if customers haven't paid.
The profit a company makes after deducting the cost of goods sold (COGS) from its revenue, before accounting for operating expenses.
A financial statement that summarizes a company's revenues, costs, and expenses over a specific period to show net profit or loss.
Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of a company's operating profitability excluding non-operating and non-cash expenses.
Let Laabam.One handle the complexity. From invoicing to GST filing, our ERP software makes accounting effortless.