Net profit is the total amount of money a company has earned during a period of time. While net profit is the amount of money a company has left after all expenses have been paid. Despite the fact that both terms refer to an excess of income over expenses. Let us discuss the difference between Net Profit Vs Net Income with the help of the comparison given below.
Also Read: YTM Vs IRR
What is Net income?
Net income is the total earnings or profit. It is commonly referred to as the bottom line, statistic for small enterprises on their income statement after all expenses have been deducted. Net profit, on the other hand, is slightly different because it is the pure profit earned by a company after deducting several categories of expenses. Net profit is used to evaluate a company's tax burden on revenue as well as its commercial profitability.
What is Net profit?
A company's net profit, often known as net income or the bottom line, is its entire earnings or profit less all expenses. It is a company's residual income after all associated costs and taxes have been removed from overall revenue.
Net profit Vs Net Income | Difference | Comparison:
- Net profit indicates the profitability of the firm. Expenses are subtracted from revenue to calculate net profit for each category of expense. Net income is the bottom line number on the income after all expenses are deducted.
- Net profit shows the dollar profitability of the business. While the net income shows the total cash inflow of revenue minus expenses during an accounting period.
- Net profit is dependent on revenue only. Net income is dependent on revenue and profit.
- Net profit allows the calculation of the profitability and tax liability of the business for a particular time period. But Net income allows you to calculate total actual earnings and give investors the ability to assess the revenue and expenses of your business.
- Net profit measures the true profit remaining after you've subtracted all your operating expenses, taxes, interest, and depreciation, While net income measures the company's profitability.
- Net profit is calculated by subtracting total expenses from total revenue and net income is calculated by subtracting money you've earned—and subtracting deductions, such as taxes, insurance, and retirement contributions from your gross income.