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Work down from revenue through costs and expenses to true bottom-line profit.
Work down from revenue through costs and expenses to true bottom-line profit.
Enter values above and click Calculate — results will appear here with the formula explained.
Net profit is what remains after every obligation — direct costs, payroll, rent, marketing, debt interest and taxes. It is the number that accrues to owners, and the only profitability measure that can't be gamed by moving costs between categories.
A business can show healthy gross margins and still bleed cash if overheads outrun them, which is why the walk down from revenue matters. Watching all three levels — gross, operating, net — reveals exactly which layer leaks.
Work down from revenue through costs and expenses to true bottom-line profit. Formula: Net profit = Revenue − COGS − Operating expenses − Interest − Taxes.
Net profit is what remains after every obligation — direct costs, payroll, rent, marketing, debt interest and taxes. It is the number that accrues to owners, and the only profitability measure that can't be gamed by moving costs between categories.
A business can show healthy gross margins and still bleed cash if overheads outrun them, which is why the walk down from revenue matters. Watching all three levels — gross, operating, net — reveals exactly which layer leaks.
Revenue $500,000, COGS $280,000, opex $140,000, interest and taxes $20,000: net profit is $60,000 — a 12% net margin on the year's sales.
Formulas are standard public references (see our methodology). External standards are cited in the text where they apply.
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