x Many companies and businesses wonder what net profit is? Is it any different from gross profit?
x You don't know the fastest way to calculate net profit? Is there a standard formula?
x Do you want to know why you need to calculate net profit and how to optimize this profit for your business?
at Proship.vn will synthesize relevant knowledge to answer what net profit is, what is the reason to calculate this profit, what is the calculation formula, what is different from gross profit,... and how to optimize this profit for the business.
What is net profit? What is the formula?
Proship will help you understand the concept of net profit with illustrative examples and calculation formulas as follows:
The concept of net profit
What is net profit? Net profit (or net profit, in English, Net Profit) is the profit that a business earns after deducting costs related to business activities, including cost of goods sold, financial costs, selling expenses, corporate management expenses and taxes.
Formula to calculate net profit
Formula to calculate net profit:
Net profit = Net revenue – (Cost of goods sold + Operating expenses + Financial expenses + Taxes)
Why must net profit be calculated?
What is the reason to calculate net profit? Net profit is an important indicator in the financial report, it provides information about the business's profit/loss situation. Therefore, when calculating net profit, it will bring many benefits such as:
Review and analyze corporate financial reports
In addition to the business owner's perspective, net profit also helps shareholders analyze financial statements easily. Financial reports and net profit index will help Shareholders make the right decisions.
LATEST UPDATE PICTURES OF CONTAINER PROSHIP LOGISTICS TRACTOR
Monitor business situation
Based on the business plan set out from the beginning, comparing it with the profits achieved in each milestone helps us understand the business situation of the enterprise.
From there, businesses will easily be able to come up with business plans based on profit or loss index. Profit accurately reflects a business's business performance, so when tracking this index, businesses can come up with appropriate business plans.
Analyze and compare business situations
For businesses in the same industry, net profit is an important indicator for investors to evaluate before making decisions. A business that has high profits and maintains them steadily over the years will be sought after by many investors.
How is net profit different from gross profit?
What is the difference between gross profit and net profit? The difference is:
| CHARACTERISTIC | NET PROFIT | GROSS PROFIT |
| Define | The remaining profit after subtracting the cost of goods sold and all expenses from revenue. | The remaining profit after subtracting the cost of goods sold from revenue. |
| Calculation formula | Net revenue – (Cost of goods sold + Selling expenses + Management expenses + Financial expenses) | Net revenue – Cost of goods sold |
| Cost level | Includes all costs of the business: sales costs, financial costs, and business management costs. | Only calculate costs directly related to that product or service. |
| Overall level | Reflects the profitability of a business after deducting all costs in a certain period of time. | Reflects profits earned from individual products or services. |
| Importance | Is an index to evaluate overall business performance during the entire business period. | Evaluate the effectiveness of production and business activities of the enterprise's products or services. |
How to effectively optimize net profit for businesses
To optimize net profit, businesses need to grasp the following principles:
Cash flow management
Businesses need to ensure that they always have enough money to pay necessary expenses and can still invest to expand their business, because if the business manages its cash flow appropriately, it will easily encounter financial difficulties.
Manufacturing enterprises also need to pay attention to debt to ensure cash flow is always maintained and capital misappropriation does not occur.
Use smart management tools
Using financial - accounting and invoice management solutions such as electronic invoice software will help businesses control input and output invoices easily, support inspection and warnings when suppliers Printing, issuing, and illegally trading invoices helps businesses avoid the risk of being fined according to legal regulations.
Build a team of quality human resources
To control costs and manage cash flow effectively, building a team of quality human resources will help the business operate smoothly and have the ability to grow strongly.
To achieve this goal, businesses need to have a plan to recruit and train highly qualified personnel and promptly adapt to changes in production and business activities.
Optimize revenue
To optimize net profit, increasing direct revenue from business services and products and taking advantage of revenue from financial investment activities is indispensable. To increase revenue, businesses need to have a plan to build a specific business strategy such as creating new products or expanding markets, finding potential customers, etc.
Stores, business households or retail businesses that need to automatically manage revenue from sales channels should use sales management software. The software will record and summarize revenue automatically, helping to reduce errors and provide accurate figures to calculate net profit.
Try the sales management software for free to fully explore 48+ reports and 13 detailed, intuitive analysis charts for business households and retail businesses.
Cost control
Cost control is also important. Businesses need to control costs effectively, including costs related to raw materials, tools that make up the product, or costs of operations, management, sales, etc.
Businesses can cut unnecessary costs, but need to ensure that these cuts do not affect the quality of products or services.
What is net profit , how to calculate net profit, how to effectively optimize net profit,... are useful knowledge that Proship has recorded and shared with businesses that want to learn. or have not grasped the principles of optimizing net profit in business. For any related questions, contact 0909 344 247 for answers and support in providing cheap Multimodal Transport Services.
