Are gross profit and net income the same?

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Morrow 0 Comments

What other expenses do we deduct and in what particular order to arrive from the gross profit to the net income? What about the group accounts. What is the figure that we split between the group and the non controlling interest?

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score 0 · Answer 1 · 2012-12-02T21:03:03+00:00

No they are not the same. Net Income is the last line in the income statement after deducting all expenses from the income generated, including taxes. Gross Profit is the revenue from operating activities less the cost of sales. Have a look at the following income statement:

Revenue 2,000
Cost of Sales (100)
Gross Profit 1900

Operating Expenses (20)
Profit from operations 1,880

Finance Costs (300)
Profit before tax 1580

Tax for the year (380)

Profit after tax 1,200

You can see that the gross profit is revenue less cost of sales. Then you add all other income (bank interest etc) and you deduct all other expenses (overhead, finance costs, tax etc). The last line which is the net result for the year is the net income.