How is net profit calculated?

Net profit is calculated by determining the total income that remains after all expenses have been deducted from total revenue. This figure represents the actual profit that a business has made during a specific period, and it is a crucial indicator of financial health. When you subtract all operating expenses, interest, taxes, and other costs from the total revenue, you arrive at the net profit figure, which reflects the effectiveness with which a company is managed and its operational efficiency.

The other options do not accurately describe how net profit is calculated. Total revenue before expenses refers to the gross revenue figure without accounting for costs, while total expenses minus revenue would give a negative value if expenses exceed revenue, not a profit figure. Finally, total sales multiplied by pricing does not account for expenses and misrepresents the profitability of operations, as it only looks at revenue generation without deducting the necessary costs involved in running the business.