Profit 2019-05-29 08:00:00

Profit

Profit is defined simply as revenue less expenses. It is the financial benefit a business generates from its revenue after subtracting all expenses, costs and taxes it needs to pay to sustain operations.

There are three types of profit: gross, operating and net profit. Gross profit (GP) is calculated by subtracting the Cost Of Goods Sold (COGS) from Total Sales (TS); (GP = TS – COGS).

Operating Profit (OP) is calculated by subtracting Operating Expenses (OE) from Gross Profit (GP); OP = GP – OE. Gross profit examines a firm’s profitability after direct expenses, while operating profit examines a firm’s profitability after satisfying its operating expenses that may include selling, general and administrative costs.

Net Profit (NP) is calculated by subtracting taxes and interest (T&I) from operating profit (OP); NP = OP – T&I, Net profit thus seeks to measure a firm’s profitability after subtracting all expenses of a business that include cost of goods sold, various operating expenses and finally taxes and interest payable.

 


Download The Guidebook To IPWM

Another Way To Own Investment Properties

Learn More About How Investment Property Wealth Management works.

Another Way To Own Investment Properties

Download The Guidebook To IPWM Investment Property Wealth Management
Download eBook