What is Net Profit ?

Net profit is the amount of money a company earn over a accounting period (generally one year).

Actually net profit is calculated by substracting a company's total expenses from total earnings or revenue within a accounting period. When the company's total income amount is greater than total expenses only net a company get net income figure otherwise the balance is said Net Loss.

EPS, NAV, PE etc. are calculated from the figure of "Net Profit After Tax". And Net Profit After Tax is calculated from Net Income of the company by substracting tax from net income.

Explanation : Suppose that your gross income is $50,000 and your total expenses is $20,000. This leaves you with a taxable income of $30,000 after substracting expenses from income. Then, suppose that another $5,000 of income tax is subtracted form your net income; the remaining $25,000 will be your net income after tax for further calculations like EPS, PE, NAV etc.



Authorized Capital of a Public Limited Company.