Net profit is an important indicator, it shows: – Financial health of the business – Determine shareholder value – Attract investors – Make decision.
Calculation: Method 1: Net profit = Total revenue – Total cost Method 2: Net profit = Gross profit – Related costs
Factors affecting net profit: – Operating expenses – Revenue- Corporate income tax – Cost of goods sold – Management costs
Methods to increase net profit for businesses: -Review pricing strategy – Discontinue products/services that are no longer profitable – Inventory control – Improve product/service value – Price increase