Posts Tagged ‘net profit’

Return on Equity

I’ve wondered how many companies calculate their return on equity. It’s a revealing statistic of just how well the owners’ investment is performing. Read the rest of this entry »


Sales and Earnings Acceleration

Most companies would be thrilled to see their sales accelerating. However, it needs to be accompanied by acceleration of earnings. The reality is that for growth to be healthy sales and earnings acceleration go hand-in-hand. Read the rest of this entry »


Importance of Net Profit and Net Margin

Net profit and net margin are two of the most important business metrics. It is essential that they be clearly understood and interpreted.

Net Profit & Net Margin Defined

Net Profit is the bottom line after deducting all expenses of the company. The formula to calculate net profit is:

Net Profit = Sales–(COGS + Operating Expenses + Other Income & Expenses + Taxes)

In the formula above COGS is the abbreviation for for Cost of Goods Sold. For clarification, revenue is sometimes used instead of the term sales, and in the formula above other income & expenses includes Read the rest of this entry »


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