net profit

• What is net profit?

  Net profit is the amount of money left after all expenses have been subtracted from gross profit.
• How is net profit calculated?

  Net profit is calculated by subtracting running costs/expenses from gross profit.
• If a business has a gross profit of $100,000 and running costs of $30,000, what is the net profit?

  Net profit is $70,000.
• What does a high net profit indicate about a business?

  A high net profit indicates effective management of production costs and fixed expenses.
• What does a low or negative net profit signify?

  A low or negative net profit indicates higher costs in relation to revenue, which can be a financial red flag.
• What are the components involved in calculating net profit?

  • Gross Profit
  • Running Costs/Expenses
  • Fixed Running Costs