The difference between gross profit and net profit

These words often appear in the income statement.

The order from top to bottom is: Operating Profit, Total Profit, Net Profit.

1) Operating profit:

Formula: Operating Profit = Operating Income - Operating Costs - Business Taxes and Surcharges - Selling Expenses - Administrative Expenses - Financial Expenses - Asset Impairment Losses + Fair Value Change Gains (- Fair Value Change Losses) + Investment Income (- Investment Losses) + Asset Disposal Gains (- Asset Disposal Losses) + Other Income.

2) Total profits.

Definition: The total profit is"Total loss"symmetry. The final financial results achieved by an enterprise through production and business activities within a certain period of time.

Formula: Total Profit = Operating Profit + Non-Operating Income - Non-Operating Expenses.

Note: Non-operating income mainly includes: gains on disposal of non-current assets, gains on the exchange of non-monetary assets, gains on intangible assets, gains on debt restructuring, gains on business combinations, gains on inventory gains, payables that cannot be paid due to creditors' reasons, subsidies, additional refunds of education fees, income from fines, gains from donations, etc.

Non-operating expenses refer to the expenses incurred by an enterprise that are not directly related to the daily production and operation activities of the enterprise. Including losses on disposal of non-current assets, losses on the exchange of non-monetary assets, losses on debt restructuring, public welfare donation expenditures, extraordinary losses, inventory losses, etc.

3) Net profit.

Definition: Net profit refers to the total profit of the enterprise in the current period minus the amount of income tax, that is, the after-tax profit of the enterprise. Income tax refers to the tax calculated and paid to the state by the enterprise on the total amount of profits realized in accordance with the standards stipulated in the income tax law. It is a deduction item from the total profit of the enterprise.

Formula: Net Profit = Total Profit - Income Tax Expense.

The specific relationship case is shown in the following figure:

Operating profit = main business income - main business cost - operating expenses - business tax and surcharge.

Total profit = operating profit + profit from other businesses - administrative expenses - financial expenses + (- non-operating income and expenditure.

Net Profit = Gross Profit - Income Tax.

Total profit refers to the surplus of various incomes of an enterprise after deducting various expenses in the process of production and operation, reflecting the total profit and loss realized by the enterprise during the reporting period.

Net profit (income) refers to the company's profit retention after paying income tax in accordance with the provisions of the total profit, which is also known as after-tax profit or net profit. The formula for calculating net profit is: net profit = total profit - income tax expense.

Net profit is the final result of an enterprise's operation, and the more net profit, the better the operating efficiency of the enterprise; If the net profit is less, the operating efficiency of the enterprise is poor, and it is the main indicator to measure the operating efficiency of an enterprise.

The company's profit is calculated in conjunction with the parent company. Parent company impact is actually impacted.

The difference between gross profit and net profit is as follows:

1. The concept is different. The total profit is the surplus of various incomes of the enterprise in the process of production and operation after deducting various expenses, and the net profit is the amount of the total profit of the enterprise in the current period minus the income tax, that is, the after-tax profit of the enterprise;

2. The definitions are different. The total profit reflects the final financial results achieved by the enterprise through production and business activities in a certain period of time. One of the components of the net income of the enterprise, and the net profit reflects the company's profit retention after paying income tax in accordance with the provisions of the total profit, which is also known as after-tax profit or net income;

3. The level in the income statement is different. The different levels of profit in the income statement are, in order, operating profit, total profit and net profit.

Legal basisArticle 166 of the Company Law of the People's Republic of China.

When the company distributes the after-tax profits of the current year, it shall withdraw 10% of the profits and include them in the company's statutory reserve fund. If the cumulative amount of the company's statutory reserve fund is more than 50% of the company's registered capital, it can no longer be withdrawn.

If the company's statutory reserve fund is insufficient to make up for the losses of previous years, it shall first use the profits of the current year to make up for the losses before withdrawing the statutory reserve funds in accordance with the provisions of the preceding paragraph.

After the company withdraws the statutory reserve fund from the after-tax profits, it can also withdraw any reserve fund from the after-tax profits by resolution of the shareholders' meeting or the general meeting of shareholders.

The after-tax profits remaining after the company makes up for the losses and withdraws the provident fund shall be distributed by the limited liability company in accordance with the provisions of Article 34 of this Law; Shares are distributed in proportion to the shares held by shareholders, except for those that are not distributed in proportion to the shares held by the articles of association.

If the shareholders' meeting, the general meeting of shareholders or the board of directors violates the provisions of the preceding paragraph by distributing profits to shareholders before the company makes up for losses and withdraws the statutory reserve fund, the shareholders must return the profits distributed in violation of the provisions to the company.

Shares of the Company held by the Company shall not be subject to distribution of profits.

The difference between gross profit and net profit

1. The formula is different.

1) Total profit = operating profit + non-operating income - non-operating expenses;

2) Net profit = total profit - income tax expense.

2. The definitions are different.

1) Net profit refers to the total profit of the enterprise in the current period minus the amount of income tax, that is, the after-tax profit of the enterprise;

2) Total profit is the final financial result achieved by the enterprise through production and operation activities in a certain period of time.

Profit refers to the operating results of an enterprise in a certain accounting period, including the net amount of income minus expenses, gains and losses directly included in the current profit, etc. It is a comprehensive reflection of the business effect of the enterprise, and it is also the concrete embodiment of its final results.

1. The profit directly included in the current profit refers to the inflow of economic benefits formed by the non-routine activities of the enterprise, which will lead to an increase in the owner's equity and have nothing to do with the owner's capital investment. Tremor.

2. The loss directly included in the current profit refers to the outflow of economic benefits formed by the non-routine activities of the enterprise, which will lead to the reduction of the owner's equity and have nothing to do with the distribution of profits to all fraudsters.

Gross profit and net profit are important indicators of a company's financial status, and there is a certain difference between them. Total profit refers to the total profit of an enterprise after deducting all costs, expenses and taxes from revenue in a specific accounting period; Net profit, on the other hand, refers to the total amount of profit obtained by an enterprise after deducting all costs, expenses, taxes and impairment of all tangible and intangible assets in a specific accounting period.

1. Definition of total profit: total profit refers to the total profit obtained by the enterprise after deducting all costs, expenses and taxes from the income in a specific accounting period, which is an important indicator of the financial status of the enterprise.

2. Definition of net profit: Net profit refers to the total profit obtained by an enterprise after deducting all costs, expenses, taxes and impairment of all tangible and intangible assets in a specific accounting period.

3. The difference between total profit and net profit: total profit is the total profit obtained after subtracting all costs, expenses and taxes, while net profit is the total profit obtained after deducting the impairment of all tangible and intangible assets.

4. Advantages of total profit: total profit can be used to measure the operating ability of the enterprise, can reflect the relationship between the income and cost of the enterprise, and can reflect the operating efficiency of the enterprise.

5. The advantages of net profit: net profit can reflect the actual income of the enterprise, the actual profit of the enterprise, and the actual operating efficiency of the enterprise.

6. The importance of total profit and net profit: total profit and net profit are important indicators of the financial status of the enterprise, which can help the enterprise understand its own business status and provide reference for the development of the enterprise. Therefore, enterprises should pay attention to the calculation of total profit and net profit, so as to find problems in time and take effective improvement measures in time.