Net Profit

Net strictly means after all deductions as opposed to just certain deductions used to arrive at a gross profit or margin. Net profit normally refers to profit after deduction of all operating expenses, notably after deduction of fixed costs or fixed overheads. This contrasts with the term gross profit which normally refers to the difference between sales and direct cost of product or service sold (also referred to as gross margin or gross profit margin) and certainly before the deduction of operating costs or overheads. Net profit normally refers to the profit figure before deduction of corporation tax, in which case the term is often extended to net profit before tax or PBT.

Updated On: 09.08.09