What is 'Profit'
Profit is a financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity. Any profit that is gained goes to the business's owners, who may or may not decide to spend it on the business. Profit is calculated as total revenue less total expenses.
BREAKING DOWN 'Profit'
Profit is the money a business makes after accounting for all expenses. Regardless of whether the business is a couple of kids running a lemonade stand or a publicly traded multinational company, consistently earning profit is every company's goal. As a result, much of business performance is based on profitability in its various forms. Some analysts are interested in topline profitability, whereas others are interested in profitability before expenses, such as taxes and interest, and still others are only concerned with profitability after all expenses have been paid.
There are three major types of profit that analysts analyze: gross profit, operating profit and net profit. Each type of profit gives the analyst more information about the company's performance, especially when compared against other time periods and industry competitors. All three levels of profitability can be found on the income statement.
Gross, Operating and Net Profit
The first level of profitably is gross profit. Gross profit is sales minus the cost of goods sold. Sales is the first line item on the income statement and the cost of goods sold (COGS) is generally listed just below it. For example, if company A has $100,000 in sales and a COGS of $60,000, it means the gross profit is $40,000, or $100,000 minus $60,000. Divide gross profit by sales for the gross profit margin, which is 40%, or $40,000 divided by $100,000.
The second level of profitability is operating profit. Operating profit is calculated by deducting operating expenses from gross profit. Gross profit looks at profitability after direct expenses, and operating profit looks at profitability after operating expenses. These are things like selling, general and administrative costs (SG&A). If company A has $20,000 in operating expenses, the operating profit is $40,000 minus $20,000, equaling $20,000. Divide operating profit by sales for the operating profit margin, which is 20%.
The third level of profitably is net profit. Net profit is the income left over after all expenses, including taxes and interest, have been paid. If interest is $5,000 and taxes are another $5,000, net profit is calculated by deducting both of these from operating profit. In the example of Company A, the answer is $20,000 minus $10,000, which equals $10,000. Divide net profit by sales for net profit margin, which is 10%.

Gross Profit
Gross profit is the profit a company makes after deducting the ... 
Net Profit Margin
Net profit margin, or net margin, is equal to net income or profits ... 
Gross Margin
A company's total sales revenue minus its cost of goods sold, ... 
Economic Profit (Or Loss)
Economic profit (or loss) is the difference between the revenue ... 
Net Operating Profit After Tax ...
Net operating profit after tax is a company's potential cash ... 
Profitability Ratios
Profitability ratios are a class of financial metrics that are ...

Investing
The Difference Between Gross and Net Profit Margin
To calculate gross profit margin, subtract the cost of goods sold from a company’s revenue; then divide by revenue. 
Investing
Gross, Operating and Net Profit Margins
A company’s income statement includes the company’s gross, operating and net profits. 
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Understanding profit metrics: Gross, operating and net profits
Rather than relying solely on a company's net profit figures, seasoned investors will often look at gross profit and operating profit as well. 
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Is Net Income The Same As Profit?
Net income and profit both deal with positive cash flow, but there are important differences between the two concepts. 
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A Look At Corporate Profit Margins
Take a deeper look at a company's profitability with the help of profit margin ratios. 
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Profitability Indicator Ratios
Learn about profit margin analysis, effective tax rate, return on assets, return on equity and return on capital employed. 
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Interpreting a Strategy Performance Report
A strategy performance report can provide key metrics to decide if your strategy is a winner.

What's the difference between gross profit margin and net profit margin?
Gross profit margin and net profit margin are two separate profitability ratios used to assess a company's financial stability ... Read Answer >> 
What is the formula for calculating profit margins?
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Gross Profit, Operating Profit and Net Income
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How do gross profit margin and operating profit margin differ?
Gross profit margin and operating profit margin both measure profitability for a company, but they have distinct differences ... Read Answer >> 
What is considered a healthy operating profit margin?
An operating profit margin is a profitability ratio that investors use when evaluating a company. Comparing a company's margins ... Read Answer >> 
What is the difference between profitability and profit?
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