What is Net Profit?
Net profit is what is left from sales after the cost of goods and all business expenses have been taken off.
Updated
Meaning
English
Net profit is what is left from sales after the cost of goods and all business expenses have been taken off.
Roman Urdu
Net profit woh hai jo sale me se saman ki cost aur karobar ke tamam kharchay nikalne ke baad bachta hai.
Also called net income, bottom line, asal munafa.
Example
A shop's gross profit for the month is 310,000 rupees. Rent, two salaries, electricity, internet and bank charges add up to 205,000. Net profit is 105,000 rupees before tax.
How it works
Net profit is the real earning of the business. Many owners in Pakistan judge the month by the cash taken home, which mixes in udhaar collections, stock bought and personal spending. Net profit separates them: sales minus cost of goods, minus expenses, minus stock lost to damage or expiry.
The owner's own drawings are not an expense; they are taken out of profit. Paying household bills from the galla without recording them makes net profit impossible to measure. Track it monthly and compare with the same month last year, since many businesses have strong seasons such as Ramadan, Eid and school openings.
In Nafaa
The Nafaa P&L page shows profit for any period against the previous one or the same dates last year, month by month and branch by branch, with net profit after expenses and stock written off.
Related terms
- Gross Profit
Gross profit is sales minus the cost of the goods sold, before rent, salaries, bills and other expenses are taken off.
- Operating Expenses
Operating expenses are the regular costs of running a business that are not part of the goods sold, such as rent, salaries, electricity and internet.
- Profit and Loss Statement (P&L)
A profit and loss statement is a report of sales, costs and expenses over a period that shows whether the business made a profit or a loss.
- Break-Even Point
The break-even point is the level of sales at which gross profit exactly covers fixed expenses, so the business makes neither profit nor loss.