Net profit is what a business has left once every cost has been deducted from its income, including direct costs, overheads, interest and tax. It is often called the bottom line because it sits at the foot of the profit and loss account.
Why it matters
Net profit shows whether the business as a whole makes money after everything is paid for. It is a fuller measure than gross profit, which only deducts direct costs.
Reading it carefully
One year of net profit tells only part of the story. Trends over time, and the cash position behind the profit, matter just as much.
- Net profit deducts every cost.
- It is more complete than gross profit.
- Trends matter more than a single year.
When Credicorp assesses a limited company or LLP, we look at net profit alongside cash flow and the wider trading picture, not as a figure in isolation.
See also: What is gross profit?, Comparing finance on speed vs cost: the honest trade-off and Daily interest vs APR: which is the honest comparison?.