Net Profit Calculator
Work down from revenue through COGS, operating expenses, interest and tax to the net profit and net margin your business truly keeps.
How it works
Net profit = revenue − COGS − operating expenses − interest − tax · Net margin % = net profit ÷ revenue × 100
Net profit — the bottom line — is what remains after every cost is subtracted: direct costs, operating expenses, interest and tax. Working down the income statement in order shows where the money goes at each stage, from gross profit to operating profit (EBIT) to pre-tax profit. Tax is applied only to positive pre-tax profit, since a loss generally produces no tax bill in the same period.
Worked example
On $200,000 revenue: subtract $120,000 COGS for $80,000 gross, then $45,000 of operating expenses for $35,000 EBIT, then $3,000 interest for $32,000 pre-tax. A 21% tax is $6,720, leaving $25,280 net profit — a 12.6% net margin.
Frequently asked questions
What is the difference between operating and net profit?
Operating profit (EBIT) is what the core business earns before interest and tax. Net profit subtracts interest and tax as well, so it reflects the final amount owners actually keep.
Why is tax only charged on positive profit here?
Because a business that loses money in a period generally owes no income tax on those operations that year. This tool applies the tax rate only when pre-tax profit is positive, which keeps the estimate realistic.
What is a healthy net profit margin?
It varies by industry, but many established businesses run net margins in the 5–15% range. Capital-light software can run much higher, while high-volume retail and food service often operate on low single digits.
Related calculators
Educational estimate, not financial advice.