Net Profit Definition

Net profit is the difference between a company’s total revenue and total expenses. It is also sometimes referred to as ‘net income’ or ‘the bottom line.’

A company’s total revenue includes all money that comes in from its business activities. This can include money from sales, interest on investments, and other sources. A company’s total expenses include all the money it spends on things like rent, salaries, supplies, and taxes.

The net profit margin is a company’s net profit divided by its total revenue. This number shows how much of every dollar of revenue a company keeps as profit. For example, if a company has a net profit margin of 5%, that means it keeps 5 cents of every dollar of revenue as profit.