What is net profit?
Net profit refers to the final profit remaining after all expenses, including taxes and interest, are deducted from total revenue. It reflects the true earnings of a business.
Why is net profit important?
It determines how much value a business generates for owners and investors. It also influences dividends and reinvestment decisions.
How is net profit different from gross profit?
Gross profit only subtracts cost of goods sold from revenue. Net profit includes all expenses, making it a more complete measure of profitability.
How is net profit used in business decisions?
Businesses use net profit to evaluate performance, plan growth, and assess financial sustainability.
Can a business have revenue but no net profit?
Yes. High expenses can eliminate profit even when revenue is strong.