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Xero Net Profit

Net profit is the amount of revenue a business earns after deducting all expenses, including taxes and interest. It reflects a company's overall profitability and is a key measure of financial success.

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  • About
  • Tech details

What Is Net Profit

Net profit is the amount of money a company earns after deducting all expenses, taxes, and other costs from its total revenue. It represents the final profit generated from the business’s core operation.
It’s also often referred to as net income, bottom line, and net earnings, but the terms could have some slight differences based on their income statement positioning.

How to Calculate Net Profit

To calculate net profit, you need to subtract the total expenses from the total revenue.

The formula is simple:

Net Profit = Total Revenue – Total Expenses

The total expenses include all costs incurred by the business, such as the cost of goods sold, operating expenses, interest expenses, depreciation expenses, taxes, and any other relevant expenses.

For example, let’s say a company saw these numbers in a specific time period:

  • Total Revenue: $500,000
  • Cost of Goods Sold: $200,000
  • Operating Expenses: $100,000
  • Interest Expenses: $10,000
  • Depreciation Expenses: $5,000
  • Taxes: $30,000

Using the formula above, we find that the company’s net profit amounts to $155,000.

It’s important to note that the specific breakdown of expenses may vary depending on the nature of the business and the accounting practices it follows.

What Is a Good Net Profit Margin

Factors such as market conditions, company size, industry, operational efficiency, and competitive landscape all impact the net profit margin of a business, which means there’s no one-size-fits-all benchmark.

That said, we found that a good general net profit margin percentage is around 10%, according to data from Xero Benchmarks for All Companies.

But depending on the industry, even this number can vary drastically.

For example, net profit margins in the retail sector can range from 2% to 10%, depending on the type of retail business. Discount retailers typically have lower net profit margins, while specialty retailers or luxury brands may have higher margins.In the healthcare sector, margins vary on the specific segment, such as pharmaceuticals, hospitals, or medical devices, but they typically range from 5% to 15%.
The highest net profit margins are usually seen in the technology and software sector, where established businesses can achieve 30% or higher margins.

How to Increase Net Profit

Net profit represents a company’s bottom line, and increasing it should be a number one priority in most modern organizations.
Depending on your size, business model, and industry, you’ll need to experiment with different approaches and strategies until you find the one that works best for your organization.

That said, we pinpointed a few expert strategies that might help you out:

  • Create better financial reports: Financial reports shouldn’t be looked at as a tedious task designed only to communicate a bunch of numbers to the shareholders. Instead, well-designed financial reports can help you spot unnecessary leaks in your business and provide the data needed to make better decisions. By creating better financial reports, you’ll notice potential expense cuts more easily and craft better revenue-boosting strategies.
  • Prioritize revenue by channel metric instead of leads by channel: The channels where you’re generating the most leads at a low price are important but don’t overlook the channels that are bringing in the most customers. Many businesses only look at the marketing aspect and don’t go one step further to see the sales side of the story. Analyze the revenue by channel metric to get these insights and better allocate your channel resources.

More resources to help you improve:

This metric has one or more equivalents:

Visualizations

  • Databox visualization

    Number

    Used to show a simple Metric or to draw attention to one key number.

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    Pie Chart

    Used to illustrate numerical proportions through the size of the slices.

  • Databox visualization

    Bar and Line Chart

    Used to show comparisons between values.

How to track Net Profit in Databox?

Databox is a business analytics software that allows you to track and visualize your most important metrics from any data source in one centralized platform.

To track Net Profit using Databox, follow these steps:

  1. 1
    Connect Xero that contains the metric you want to track
  2. 2
    Select the metric you want to track from the list of available metrics
  3. 3
    Drag and drop the selected metric onto your dashboard
  4. 4
    Watch your dashboard populate in seconds
  5. 5
    Put Net Profit on the Performance screen
  6. 6
    Get Net Profit performance daily with Scorecards or as a weekly digest
  7. 7
    Set Goals to track and improve performance of Net Profit
Xero integration with Databox Track Net Profit from Xero in Databox GET STARTED

Xero Net Profit included in Dashboard Templates 1

  • Live view

    ChartMogul & Xero SaaS Leadership Dashboard

    Lead with confidence using our "SaaS Leadership Dashboard" powered by ChartMogul and Xero. Get real-time insights into financial and operational metrics for informed decision-making. Elevate your SaaS business effortlessly.

    Mixpanel HubSpot CRM Xero Google Analytics 4 ChartMogul

Basics

  • Description
    Net profit is the amount of revenue a business earns after deducting all expenses, including taxes and interest. It reflects a company's overall profitability and is a key measure of financial success.
  • Category
    Accounting
  • Subcategory
    Profit
  • Date Added
    2017-03-09
  • Default Format
    PrefixCurrency
  • Cumulative Support
    Yes
  • Units
    Yes
  • Granularities
    monthly, quarterly, yearly
  • Favorable Trend
    increasing
  • Historical Data
    Yes
  • Changing historical data
    Yes
  • Forecast Support
    Yes
  • Benchmark Support
    Yes
  • Media Support
    No
  • Dimension
    N/A
  • Metric Type
    general Learn more
  • API Endpoint
    https://api.xero.com/api.xro/2.0/reports/ProfitAndLoss

Questions? We've got answers.

  • What is net profit vs. gross profit?

    Net profit is the amount of money a company has after subtracting all expenses from total revenue, including taxes, interest, and operating costs. It’s the actual profit the company has earned.

    Gross profit, on the other hand, is the profit remaining after subtracting only the cost of goods sold from the revenue. 

  • What does net profit tell you?

    Net profit tells you how much actual profit a business generates, after accounting for all expenses and taxes. It’s an indicator of how efficient the company is at managing its costs and generating revenue, and it serves as a key measure of profitability. 

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