Differences In Dirty Profit And Net Profit, What Is The Formula For Calculating It?

Illustration of calculating business profit (Freepic)

YOGYAKARTA - Entrepreneurs or business owners must know the differences in gross profit and net profit. Not a few novice businessmen are still confused about how to calculate gross profit or net profit. In fact, these two components are very important in a business financial report.

Gross profit and net profit will be used to describe the financial ratio and see profit margins. So what are the differences in gross profit and net profit?

Gross profit and net profit are actually both proceeds or profits obtained from sales. However, both components have different way of calculating.

Gross profit or gross profit is income from the sale of a business. This opinion is the result of sales that have not been reduced by capital costs and others, such as overhead, employee salaries, interest payments, and taxes.

Profits in gross profit still include production costs and costs for providing services. So when calculating gross profit, it means that the pure profit from sales is not known without any capital count and others.

Net profit or net profit is a pure profit earned by a business from the proceeds of sales. The profit from net profit does not include operational costs and the provision of goods or products. So in calculating net profit, it has been reduced by capital and other costs, such as overhead, employee salaries, and taxes.

To find out the amount of gross profit, the way to calculate it is by reducing the income formula by HPP. Revenue is the result of the sale of goods or services. Meanwhile, HPP is the cost of products to provide goods or services.

For example, the proceeds from the sale of a business get an income of IDR 100 million. Meanwhile, HPP amounted to IDR 40 million. So the gross profit calculation is IDR 100 million - IDR 40 million: IDR 60 million. Gross profit obtained is a total of IDR 60 million.

Calculation of net profit can also be done easily. The formula calculates net profit, namely: Equal profit + other income - another burden.

Intermediate profit is the amount of profit earned by a business that has been deducted at production costs and other costs. Another income is income obtained apart from sales, it can be in the form of royalties, bank interest, and others. Meanwhile, other costs are costs that are not related to product manufacturing and marketing, namely financial costs, administrative costs, and taxes.

Such is the review of differences in gross profit and net profit in a business. Although the two components are both in the form of the sale of a product or service, the calculation method is different.

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