How To Calculate Net Profit

Last Updated on August 16, 2023 by Jake Sheridan

In this tutorial, you will learn how to calculate net profit in Google Sheets.

How To Calculate Net Profit in Google Sheets

Net profit is an important financial metric that businesses use to measure the overall success of their business. It is the total amount of money left after deducting all costs and expenses from the total gross revenue.

We can calculate the net profit by subtracting the cost of goods sold and other expenses from the total gross revenue. For example, if our company has a total gross revenue of $2500 and the cost of goods sold is $1000, then the net profit is $2500 – $1000 = $1500. Other costs that are often deducted from gross revenue include marketing costs, the cost of rent, and taxes.

The net profit provides the most accurate measure of a company’s overall performance. It provides insight into the actual profitability of the business, taking into account all costs and expenses.

In this guide, we will show you how to calculate net profit in a Google Sheets spreadsheet.

How To Calculate Net Profit of Your Business in Google Sheets

Here’s how to calculate the net profit of your business in Google Sheets

Step 1

First, we’ll need to calculate the total revenue earned during a specified time frame. We can typically find the total revenue by multiplying the number of sales of a certain item by the unit cost.

In our example, our business gained a total revenue of $6000 after selling 1200 units of a certain product.

Step 2

Next, we must identify the total cost of goods sold for all products that contributed to the total revenue.

In this example, each item costs $3 to manufacture. Since we sold 1200 units of the product, we can say that our cost of goods sold is $3600. This amount will be deducted later to calculate net profit.

Step 3

Next, we must identify any other expenses. For example, your business may have spent a certain amount to market the product online. Administrative expenses, such as rent, utilities, and insurance, should also be accounted for. Other possible expenses include income tax and operational costs.

Step 4

We can find the net profit by finding the sum of all expenses and subtracting that amount from the total revenue.

In the example above, we were able to determine that the company gained a net profit of $1000 after all expenses are accounted for.

Summary

This guide should be everything you need to calculate the net profit in Google Sheets.

You may make a copy of this example spreadsheet to test it out on your own.