What is a firm’s true profit?

Knowing how much profit a firm makes is vital. But company accounts rarely make it straightforward. Here, we explain how to find the figures you need to know.

If you're considering investing in a company, one of the first things you'll want to know is how much money, or profit, it makes. That may sound simple – after all, profit is just the difference between a company's sales (also known as turnover or revenues) and its costs. However, look at a set of accounts and you'll rapidly realise it's not that easy. Companies give a wide range of profit figures, from operating profit to net income. So why are there so many, and which is the most important?

Gross profits and margins

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.