Understanding Net Profit

What is net profit sometimes referred to as?

• Top line

• Bottom line

• Gross profit

• Operating profit

Which of the following is NOT included in the calculation of net profit?

• Cost of sales

• Tax payments

• Operating expenses

• Sales revenue

How is the net profit margin calculated?

• Total expenses divided by net profit

• Sales revenue divided by net profit, multiplied by 100

• Net profit divided by sales revenue, multiplied by 100

• Net profit divided by total expenses

What does a higher net profit margin indicate?

• Higher tax payments

• Lower sales revenue

• Better overall profitability

• Higher operating costs

What should a business investigate to improve net profit?

• Reduce operating costs and overheads

• Increase tax payments

• Increase gross profit

• Increase sales revenue