Entity: NET-PROFIT
Net profit, also known as net income, is the amount of money a company retains after deducting all expenses from its total revenue. It is a key indicator of a business's profitability and financial health.
NET-PROFIT
Etymology
The term 'net profit' originates from the combination of 'net,' meaning remaining after deductions, and 'profit,' denoting financial gain.
Definition
Net profit, synonymous with net income, is the total earnings of a company after subtracting all expenses, including operating costs, interest, and taxes from its revenue. It is a crucial metric for assessing a business's financial performance.
Historical Context
The concept of net profit has been a fundamental aspect of accounting and business analysis for centuries, evolving alongside economic practices and financial reporting standards.
Cultural Significance
Net profit serves as a key indicator of a company's success and is closely monitored by investors, analysts, and stakeholders. It influences strategic decision-making and reflects the efficiency and profitability of a business.
Related Concepts
- Gross profit: The difference between revenue and the cost of goods sold.
- Operating profit: The profit generated from a company's core business operations before interest and taxes.
See Also
The ultimate measure of a company's profitability, net profit is the difference between a company's revenue and expenses.