Gross Profit and Net Profit Calculator
Works down a simple income statement from revenue to net profit.
Share sends a link that reopens these numbers. Copy details pastes the full breakdown as a list.
The formula
gross profit = revenue − cost of goods sold operating profit = gross profit − operating expenses net profit = operating profit − interest − tax
Each line takes off another layer of cost. Margins divide the profit figure by revenue.
What to watch out for
Use figures for one period, and keep them all to that period. Include only the direct cost of what was sold in cost of goods sold, and put everything else in operating expenses.
Frequently Asked Questions
What is the difference between gross profit and net profit?
Gross profit takes off only the direct cost of what you sold. Net profit also takes off overheads, interest and tax. Revenue of 100,000 with direct costs of 60,000 gives a gross profit of 40,000, a 40% margin. After 25,000 of overheads, 2,000 of interest and 3,000 of tax, net profit is 10,000, or 10%.
What is a good gross margin?
It depends on the industry. A shop and a software company have very different direct costs, so compare with similar businesses and with your own past periods.
Does a profit mean the business has cash?
No. Profit counts a sale when it is made, even if the customer has not paid yet, and it does not show money tied up in stock and equipment. A profitable business can still run short of cash.