Explanation
Net profit is a core indicator of business success and is calculated as
Net Profit = Revenue – (COGS + Operating Expenses + Interest + Tax)
A positive net profit shows that the business is not only earning but also retaining money after all obligations.
Practical Example of Net Profit
A bakery earns £200,000 in revenue. After all costs and taxes, £30,000 remains. That’s the net profit.
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