What Is Net Profit?
Net profit is what's left after every business expense — rent, wages, transport, and more — is subtracted from gross profit. It's the most honest answer to whether your business actually made money.
Direct answer
Net profit is what's left after every business expense is subtracted from gross profit — not just the cost of goods, but rent, staff wages, transport, Mobile Money charges, and everything else it takes to keep the business running. It's the most honest answer to "did I actually make money?"
How profit subtotals like this are presented in formal financial statements is an active area of accounting standards — see the IFRS Foundation's IFRS 18 Effects Analysis. This page describes a simplified, practical version for day-to-day use, not a full financial statement.
| Revenue | ₵20,000 |
| Cost of Goods Sold | ₵14,000 |
| Gross Profit | ₵6,000 |
| Operating Expenses (rent, wages, transport, MoMo charges) | ₵4,000 |
| Net Profit | ₵2,000 |
| Net Profit Margin | 10% |
This shop had a healthy-looking 30% gross margin, but after everything else it takes to run the shop, only 10% of that ₵20,000 in sales actually became profit. Both numbers are true and useful — they just answer different questions.
Gross profit vs. net profit — why both matter
Gross profit tells you whether your pricing covers your stock cost. Net profit tells you whether your entire business, including its overhead, is actually profitable. A shop can have excellent gross margins and still lose money overall if its operating expenses are too high relative to its sales volume.