Accounting profit is the profit on the income statement. Economic profit goes further by also subtracting implicit (opportunity) costs, such as the salary an owner gives up.
How to use the Accounting Profit Calculator
- Total revenue
- Cost of goods sold
- Operating expenses (wages, rent, utilities)
- Depreciation and amortization
- Interest
- Tax rate
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter total revenue and each explicit cost.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| Total revenue | Amount in your currency |
| Cost of goods sold | Amount in your currency |
| Operating expenses (wages, rent, utilities) | Amount in your currency |
| Depreciation and amortization | Amount in your currency |
| Interest | Amount in your currency |
| Tax rate | In % |
What each result means
- Profit before tax = [Total revenue] – [Cost of goods sold] – [Operating expenses (wages, rent, utilities)] – [Depreciation and amortization] – [Interest]
- Taxes = max([Profit before tax], 0)×[Tax rate]÷100
- Accounting profit (after tax) = [Profit before tax] – [Taxes]
- Net margin = [Accounting profit (after tax)]÷[Total revenue]×100
Example values
How the main result changes when Total revenue changes and everything else stays at the example values above:
| Total revenue | Accounting profit (after tax) |
|---|---|
| 400,000 | -225,000 |
| 600,000 | -25,000 |
| 800,000 | 138,250 |
| 1,000,000 | 296,250 |
| 1,200,000 | 454,250 |
| 1,600,000 | 770,250 |
Formula
Accounting profit = total revenue − explicit costsExplicit costs = cost of goods sold + operating expenses + depreciation + interest + taxesWorked example
Inputs — Total revenue: $800,000; Cost of goods sold: $350,000; Operating expenses (wages, rent, utilities): $220,000; Depreciation and amortization: $40,000; Interest: $15,000; Tax rate: 21 %.
Results — Profit before tax = $175,000.00; Taxes = $36,750.00; Accounting profit (after tax) = $138,250.00; Net margin = 17.28 %.
Frequently asked questions
What is accounting profit?
Revenue minus all explicit costs recorded in the books.
How is it different from economic profit?
Economic profit also subtracts opportunity costs.
Is accounting profit the same as net income?
Yes, accounting profit after tax equals net income.
What formula does the Accounting Profit Calculator use?
Accounting profit = total revenue − explicit costs.