Net profit is what is left after every cost has been paid: direct costs, operating expenses, interest and tax. It is the number that funds growth, repays owners and survives a bad quarter, and it is often a fraction of the gross profit that looks so healthy at the top of the statement. Enter your revenue and each layer of cost and the calculator walks down the income statement, showing gross profit, operating profit, profit before tax and net profit, with the margin at each stage so you can see exactly where the money goes.
Net Profit Calculator
Net profit is the money actually left at the end: revenue less the cost of goods sold, less operating expenses, less interest and other costs, less tax. The net profit calculator walks through each step so you can see where the money goes, and returns the operating margin and net margin alongside the totals.
A business with $500,000 of revenue, $300,000 of direct costs, $120,000 of operating expenses, $10,000 of interest and a 25% tax rate earns a gross profit of $200,000, an operating profit of $80,000, profit before tax of $70,000 and a net profit of $52,500, a 10.5% net margin. Net margins vary widely by industry (supermarkets live on 2–3%, software companies often exceed 20%), so compare yourself with similar businesses, and watch the trend from quarter to quarter rather than a single figure.
Related Calculators
Frequently Asked Questions
What is the difference between gross, operating and net profit?
Gross profit is revenue minus direct costs. Operating profit (EBIT) also subtracts operating expenses such as rent, salaries and marketing. Net profit further subtracts interest and tax. Each is a stricter test of the business than the one before.
What is a good net profit margin?
Widely variable: 2–5% for grocery and distribution, 10–15% for many service businesses, 20% or more for software. A margin that is falling while revenue grows is the warning sign to investigate.
Why does the calculator apply tax only to positive profit?
Businesses do not receive a refund on losses in the year they occur; a loss is usually carried forward against future profits. The calculator therefore charges tax only when profit before tax is above zero.
