Net Profit is the amount of income remaining after deducting all expenses, taxes, and costs from total revenue.
How It Works:
- Total revenue is calculated.
- All expenses including operating costs and taxes are deducted.
- The remaining amount is net profit.
- It reflects the overall profitability of the business.
Benefits:
- Indicates true financial performance
- Helps in decision making
- Supports business valuation
- Useful for investors and stakeholders
Example:
A company earns ₹20,00,000 in revenue and incurs ₹15,00,000 in expenses, resulting in a net profit of ₹5,00,000.