Net Profit
Net Profit is the money a company truly keeps after paying for absolutely everything. It is often called the "bottom line" because it sits at the very bottom of a financial report called the income statement. It measures how profitable a business really is once every cost has been accounted for.
To calculate it, you start with operating profit — the money left after covering the day-to-day costs of running the business, like wages and materials. From that, you subtract taxes (money owed to the government) and interest (the cost of borrowing money, such as loan repayments). What remains is Net Profit.
Reading the result is simple: a high net profit means the company is keeping a healthy amount of money after all its bills; a low or negative number means costs are eating up most or all of the earnings. As a project manager, you might look at net profit when deciding whether a project is worth doing, or when justifying that a project genuinely added to the company's real earnings rather than just its revenue.
Think of it like your take-home pay. Your salary looks big on paper, but only after taxes and any loan repayments come out do you see what actually lands in your bank account to spend. Net profit is a company's take-home pay.
Imagine a company's operating profit for the year is $500,000. They owe $120,000 in taxes and $30,000 in interest on a loan. Net Profit = $500,000 − $120,000 − $30,000 = $350,000. This tells you the company actually gets to keep $350,000 after every single cost, tax, and interest payment is settled — that is the real reward for the year's work.
Every PMP formula explained free — plus worked examples and practice in PMP Math, and full timed mocks in the simulator.