If revenue is 120,000 and cost of goods sold is 70,000; operating expenses are 20,000; interest 5,000; and taxes 10,000, what is net profit?

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Multiple Choice

If revenue is 120,000 and cost of goods sold is 70,000; operating expenses are 20,000; interest 5,000; and taxes 10,000, what is net profit?

Net profit is the amount left after all costs are subtracted from revenue. To compute it, subtract each expense from revenue: COGS, operating expenses, interest, and taxes. Starting with revenue of 120,000, subtract COGS of 70,000 to get 50,000 gross profit. Subtract operating expenses of 20,000 to reach 30,000 operating income. Subtract interest of 5,000 to arrive at 25,000 before taxes. Finally, subtract taxes of 10,000 to obtain 15,000 net profit. So, the net profit is 15,000. If taxes were ignored, you’d have 25,000 before taxes; if only COGS were subtracted, you’d have 50,000.

Net profit is the amount left after all costs are subtracted from revenue. To compute it, subtract each expense from revenue: COGS, operating expenses, interest, and taxes.

Starting with revenue of 120,000, subtract COGS of 70,000 to get 50,000 gross profit. Subtract operating expenses of 20,000 to reach 30,000 operating income. Subtract interest of 5,000 to arrive at 25,000 before taxes. Finally, subtract taxes of 10,000 to obtain 15,000 net profit.

So, the net profit is 15,000. If taxes were ignored, you’d have 25,000 before taxes; if only COGS were subtracted, you’d have 50,000.

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