Net profit — also called the bottom line — is what remains after you subtract ALL expenses from total revenue. That includes cost of goods sold, operating expenses, interest, taxes, and every other cost.
The formula: Net Profit = Total Revenue - Total Expenses. If a company earns $1 million in revenue and has $850,000 in total expenses, its net profit is $150,000.
Net profit is the ultimate measure of profitability. A company can have high revenue but low (or negative) net profit if expenses are out of control. Investors look at net profit margin to judge how efficiently a company converts sales into actual profit.