Net Profit

Sales minus the cost of sales, minus all administrative and selling costs. Also known as net income or net earnings.


•   Retail Store: A shop sells goods worth £200,000, with the cost of sales at £120,000 and other expenses of £50,000, resulting in a net profit of £30,000.

•   Manufacturer: A company sells machinery worth £5 million, with direct costs of £3 million and other expenses of £1.5 million, resulting in a net profit of £500,000.

Real-Life Scenario:

A restaurant generates £1 million in revenue, with a cost of sales of £400,000 and other expenses of £300,000. The restaurant’s net profit is £300,000.