Net profit is the amount a business retains after all costs — operating expenses, interest, taxes, and depreciation — are deducted from total revenue. It is the "bottom line" of the profit and loss statement and the truest measure of financial performance.
Net Profit = Total Revenue − Cost of Goods Sold − Operating Expenses − Interest Expense − Taxes.
Example: Revenue AED 500,000 − COGS AED 200,000 − Operating Expenses AED 150,000 − Interest AED 10,000 − Corporate Tax AED 12,600 = Net Profit AED 127,400.
Gross profit deducts only direct costs from revenue. Net profit deducts all costs. A high gross margin but low net profit typically signals high overhead — a red flag visible in your management accounts.
UAE corporate tax is calculated on taxable income, which broadly aligns with accounting net profit. The tax rate is 9% on taxable income above AED 375,000.
Finanshels produces accurate monthly management accounts and annual financial statements showing net profit position and its drivers. Start with our bookkeeping and accounting services.
