Net Profit Calculator
Work out net profit and net profit margin from revenue, cost of goods sold, operating expenses, depreciation, interest, other income and income tax.
Net profit is the bottom line: what a business keeps from its revenue after every cost, including interest and income tax. This calculator builds a compact income statement from the figures you have, so you can see not only the final profit but also gross profit, EBITDA and operating profit along the way — the numbers lenders, buyers and investors usually ask for.
How to use this tool
- Enter revenue and cost of goods sold for the period.
- Enter operating expenses and depreciation and amortization.
- Add interest expense and any other income, such as interest earned.
- Enter your income tax rate and read net profit, net margin and the statement.
Formula
Operating profit (EBIT) = Revenue − COGS − Operating expenses − Depreciation
Profit before tax = EBIT − Interest + Other income
Net profit = Profit before tax − max(0, Profit before tax) × Tax rate
Net margin = Net profit ÷ Revenue × 100
Tax is applied only when profit before tax is positive. EBITDA adds depreciation and amortization back to operating profit. Real tax bills depend on deductions and credits, so use your effective rate for a closer estimate. Enter depreciation only once, separately from COGS and operating expenses. The EBITDA/operating-profit lines assume those categories exclude it. Tax effects on losses, timing differences and credits are not modeled.
Example
A company earns $500,000 of revenue with $200,000 COGS, $150,000 of operating expenses and $20,000 of depreciation, giving operating profit of $130,000. After $10,000 of interest and $5,000 of other income, profit before tax is $125,000. At a 21% tax rate, tax is $26,250 and net profit is $98,750 — a 19.75% net margin.
Frequently asked questions
What is the difference between gross profit and net profit?
Gross profit subtracts COGS from revenue. Net profit also reflects operating costs, financing, other income and tax. Large other income can make net profit exceed gross profit.
Is net profit the same as cash flow?
No. Depreciation reduces profit without using cash, while loan repayments, stock purchases and customers paying late affect cash without appearing as expenses.
What tax rate should a sole trader use?
Enter an assumed effective rate appropriate to the scenario. The default 21% is the regular US federal corporate rate, not a sole-trader rate. Taxable income, credits, losses and alternative taxes can differ from this simplified book-profit calculation.
Sources
Last updated: 2026