Net profit calculation

To calculate the net profit, you need to subtract the total expenses from the revenue. Total expenses include the cost of goods sold (COGS), operating expenses, interest expense, and tax expense.

Here's an example:

Suppose a company has the following financials for the year:

Revenue: $100,000COGS: $60,000

Operating expenses: $20,000

Interest expense: $5,000

Tax expense: $5,000.

To calculate the net profit, you would need to subtract the total expenses from the revenue:

Net profit = Revenue - COGS - Operating expenses - Interest expense - Tax expense          

                 = $100,000 - $60,000 - $20,000 - $5,000 - $5,000          

                 = $10,000,Therefore, the company's net profit for the year is $10,000.

Net profit is an important metric for a company because it shows the profit earned after all expenses have been accounted for. It is a useful measure of the company's overall financial performance and can be used to assess its profitability.

What is Finanshels?

What is Finanshels?Setting up a good small-business bookkeeping system can be an involved process, especially if you’re not an experienced bookkeeper. Rather than spending enormous time and effort on getting your books up and running, consider turning to Finanshels for help. We’ll set up your bookkeeping system to ensure that your business is starting off right – and we’ll save you a huge amount of stress.Want someone to help you organize your bookkeeping system? Try Finanshels