Calculate your business's net income by subtracting explicit costs from total revenue.
Business Inflow & Outflow
Explicit costs include: Wages, Rent, Materials, Utilities, and Taxes.
Profit Analysis
Accounting Profit$40,000
Profit Margin40.00%
Revenue Breakdown
About this calculator
Overview
Calculate your business's net income by subtracting explicit costs from total revenue.
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Pro Tips
What is Accounting Profit?: Accounting profit is the net income a company generates after subtracting all explicit costs (like wages, rent, and materials) from total revenue. It follows Generally Accepted Accounting Principles (GAAP).
What is the difference between Accounting Profit and Economic Profit?: Accounting profit only considers 'explicit costs' (actual cash outlays). Economic profit also subtracts 'implicit costs' or 'opportunity costs' (the value of the next best alternative given up).
Can Accounting Profit be negative?: Yes, if explicit costs exceed total revenue, the business incurs an accounting loss.
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Fun Facts
"Explicit costs are often called 'out-of-pocket' costs because they involve a direct payment of money."
"Most financial reports and tax filings are based on accounting profit, not economic profit."
"A business can have a high accounting profit but a negative economic profit if the owner's time and capital could have earned more elsewhere."
