An entity’s total earnings (revenue) after subtracting all its expenses (mainly, costs of core operations as well as depreciation and taxes):

Net profit= gross income – expenses

Net profit or net income is an entity’s income minus cost of goods sold (COGS), expenses, depreciation and amortization, interest, and taxes for an accounting period. Net profit is an entity’s actual profit and hence it is commonly referred to as “bottom line” and is a indicator of an entity’s profitability for the reporting period involved.

Generally speaking, net profit is the amount of accounting profit an entity has left over after covering all its relevant expenses. In other words, is the excess of revenues over expenses for a specific period of time (an accounting period). Net income is usually perceived as one of the key indicators of profitability for an entity.