Cost Calculator AI
Business & StartupP&L Analysis

Business Profit Calculator

Model complete income statement profitability: calculate gross profit, operating income (EBIT), and bottom-line net profit after overhead, interest, and taxes.

Income & Expense Cascade

Income Statement Profitability Formulas

Gross Profit = Revenue - COGS; Operating Income (EBIT) = Gross Profit - OPEX; Net Profit = EBIT - Interest & Taxes
  • Gross Profit: Revenue remaining after paying direct production and inventory costs.
  • Operating Income (EBIT): Profit earned from core operations before capital structure and taxes.
  • Net Profit: The ultimate bottom-line retained earnings available to owners or reinvestment.

Step-by-Step Worked Example

Scenario: A company with $200,000 revenue, $80,000 COGS, $60,000 operating expenses, and $12,000 taxes/interest

Calculation Steps:

  1. Gross Profit = $200,000 - $80,000 = $120,000 (60.0% Gross Margin)
  2. Operating Income (EBIT) = $120,000 - $60,000 = $60,000 (30.0% Operating Margin)
  3. Net Profit = $60,000 - $12,000 = $48,000 (24.0% Net Margin)
Result: The business generates $120,000 gross profit (60.0%), $60,000 operating profit (30.0%), and $48,000 net profit (24.0%).

How to Use This Calculator

  1. 1Enter total gross sales revenue.
  2. 2Input Cost of Goods Sold (direct materials and manufacturing labor).
  3. 3Provide general SG&A operating expenses (rent, marketing, admin payroll).
  4. 4Optionally include financing interest and business income tax provisions.

Assumptions & Limitations

  • Revenue is recognized on an accrual or cash basis consistently with costs.
  • Excludes extraordinary one-time asset sales.

Frequently Asked Questions

What is considered a healthy net profit margin for a business?

While margins vary across industries, 10% net profit margin is considered healthy, 20% is strong, and 5% or below indicates vulnerable operational efficiency.

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