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1-Gross profit = Sales or service revenues− Cost of goods sold (COGS)
2- Operating income = Gross profit− Selling, general, and administrative expenses
3-Net income = Operating income +or-Interest,+or- Gains or loss - Income tax
GROSS PROFIT = REVENUE - COST OF GOODS SOLD,
OPERATING PROFIT = GROSS PROFIT + INDIRECT INCOME - INDIRECT EXPENSES
NET INCOME = OPERATING PROFIT + NON-OPERATING INCOMES - NON-OPERATING EXPENSES - INTERESTS - TAXES.
THIS IS A BOTTOM LINE FIGURE IN INCOME STATEMENT.
They are components of Mulitple income statement.Gross profit is caluclated by taking the difference between net sales minus direct expense (cost of sales). Operating income is calculated by taking a difference between from gross profit minus operating expenses(marketing and administrative) Net income actually calculated from Operating income minus tax expense, interest expense and exordinary loss etc. Net income is very close to Retained earning and can be used for futher investment or to pay dividend to stock holders.
very good question
net profile it is
( profile - all cost )
but
gross profile
it is
All revenue
Gross profit = Net Sales (Revenue) - Cost of Goods Sold
OPerating Profit EBIT= Gross Profit - General & Admin Expense-selling & Marketing Expense
Net Income : EBIT- (Other Income / loss)-(Interest /TAX)
A Smart Question with equally Smart Answer! Thanks.
I fully endorse Your Constructive/Astounding submission Mr. Mohamed Ghazi.
