Accounting Profit Calculator
Calculate a business's accounting (net) profit by subtracting all explicit costs — cost of goods sold, operating expenses, depreciation, interest, and taxes — from total revenue.
How to use this tool
- Enter total revenue, cost of goods sold (cogs), operating expenses (excl. cogs & depreciation), depreciation & amortization, interest expense and effective tax rate in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your accounting (net) profit and the full breakdown beneath it.
Formula
Gross Profit = Revenue − COGS
Operating Profit (EBIT) = Gross Profit − Operating Expenses − Depreciation
EBT = EBIT − Interest Expense
Tax = EBT × Tax Rate
Accounting Profit = EBT − Tax
How it works
Accounting profit (net income) is calculated by subtracting all explicit, recorded costs from total revenue following the standard income-statement structure: revenue minus cost of goods sold yields gross profit; subtracting operating expenses and depreciation yields operating profit (EBIT); subtracting interest gives earnings before tax; subtracting taxes gives net profit.
This differs from economic profit, which also deducts implicit (opportunity) costs such as the owner's foregone salary or the cost of equity capital. Only costs that appear in financial statements are included here.
Worked example
$500,000 revenue, $200k COGS, $100k OpEx, $20k depreciation, $10k interest, 25% tax
- Gross Profit = $500,000 − $200,000 = $300,000.
- EBIT = $300,000 − $100,000 − $20,000 = $180,000.
- EBT = $180,000 − $10,000 = $170,000.
- Tax = $170,000 × 25% = $42,500. Net Profit = $170,000 − $42,500 = $127,500.
Accounting profit = $127,500; net profit margin = 25.50%.
Key terms
- Accounting Profit
- The net income of a business after deducting all explicit costs recorded in the financial statements, including taxes.
- EBIT
- Earnings Before Interest and Taxes — operating profit, representing the profitability of core operations before financing and tax effects.
- Gross Profit
- Revenue minus the direct cost of producing goods or services (COGS).
- Net Profit Margin
- Net profit expressed as a percentage of revenue, indicating how much profit is earned per dollar of revenue.
- Explicit Costs
- Actual, out-of-pocket payments made by a business, as opposed to implicit opportunity costs.