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The bottom line of any business is what money will be left out of the income after all of the costs and expenses have been subtracted. This is the Nett Profit and it is always expressed before taxation since the application of taxes will depend on the Nett Profit itself as well as other factors
Simply put, the Operating Statement of a business would look like this
This results in Gross Profit
Less Expenses
This results in Nett Profit before tax
Nett Profit after tax is also known as Retained Earnings since it is the real potential money that would be available in the business for investment, payments to shareholders or repaying long term loans. In practice the true cash situation is reflected by the Bank Statement and that will be affected by the performance of the credit control management and the cash liabilities that the enterprise has at the time. These latter aspects are dealt with in the Balance Sheet
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Last Update 01-Apr-2010
Date first published 07-Nov-2005