2 July 2021
Net profit (also referred to as net income or net earnings) measures how much money a company has earned from doing business over a given period of time (usually a year).
Net profit shows what is left from the money a company has earned (revenue) after subtracting all expenses.
In accounting terms it is often referred to as the “bottom line” (because it is reported at the bottom of an income statement).
Net Profit = Total Revenue – Total Expenses (including operating expenses, financing costs and taxes)
This indicator is included in the book: Key Performance Indicators – the 75+ measures every manager needs to know, which contains an in-depth description of this KPI, as well as practical advice on data collection, calculations, target setting, and actual usage.
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