How do you find percent profit?

Answer 1

Profit can be described as Gross Profit, and Net Profit. To describe it in simple terms:

• Gross Profit is Revenue, minus Cost of materials directly associated with those revenues.
• Net Profit is Revenue, minus all costs (tangible and intangible) associated with the same time period as the revenue received.

For the Cost of materials, this could be different things. For a store, which just sells items that it purchases, this would be the cost of the items which were sold. For a business that manufactures items or products, this would be the materials used to produce a product.

The other costs, not directly related are things like rent, utilities, advertising, labor, interest on loans, and then (intangible) depreciation and amortization of assets. These costs are incurred regardless if anything is sold (in the short term, anyway - if things don't improve, then changes would need to be made, like moving to a less expensive space, reducing labor expenses, etc.)

Whichever Profit that you are interested in, the Percent Profit is calculated by dividing the profit dollars by the revenue dollars, then multiply by 100% to get as a percentage.

Example: Revenues were $5000 in a given month. Total costs for that month were $4200. The amount of profit is $800 ($5000 - $4200), and the percent profit = ($800)/($5000) x 100% = 16%