Sean M. answered • 03/14/19

Experienced Math Teacher and Tutor.

You can have a gross profit and a net profit. The gross profit is calculated by subtracting the cost of sales from revenue. This figure will be higher than the net profit.

To calculate the net profit you add all the direct overheads such as wages, rent, utilities and then subtract this amount from the gross profit.

The calculations required for audited accounts can be more complicated. For instance in manufacturing you will also have to take into account indirect overheads, which will also have to subtracted from the initial gross profit.

Hope this helps.