Profit is the financial gain a business earns after subtracting all expenses from its total revenue. It reflects how efficiently a company is operating and is an indicator of its financial health.

There are several types of profit:

• Gross profit: Revenue minus the cost of goods sold (COGS). It shows how much a company earns from its core products or services before operating expenses.
• Operating profit (also called EBIT): Gross profit minus operating expenses like salaries, rent, and utilities.
• Net profit: The bottom line - what remains after deducting all costs, including taxes, interest, and other expenses, from total revenue.

Formula for Net profit:

Net profit = Total revenue – Total expenses

Example:

If a company generates $100,000 in revenue and has $70,000 in expenses, its net profit is: $100,000 – $70,000 = $30,000