Accounting Profit Calculator


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What is accounting profit?

Accounting profit is an amount of money the company earns from the financial point of view. This type of profit is presented in the financial statements of the company so it must be as accurate as possible. 

Unlike the economic profit, when calculating accounting profit there is no room from various interpretations or missing opportunity speculations. The accuracy of accounting profit is regulated by the law and it is strictly standardized.

How to calculate accounting profit?

In order to calculate the accounting profit, follow the procedure:

  1. Find out your revenue for a given period.

  2. Sum all the operating expenses like rent, payroll, COGS etc.

  3. Calculate the interest you paid on the loans you take for your business.

  4. Calculate the depreciation - the reduction of value of tangible assets over time.

  5. Fill the data into the form above or substitute to the formula below.

Accounting Profit Formula

The formula for calculating accounting profit is pretty straightforward, you need to subtract all the financial costs from the company's revenue. 

Accounting_profit = Total_revenue - operating_costs - interest - depreciation

The importance of accounting profit

The accounting profit is also known as bookkeeping profit or financial profit. The profit value is crucial for income tax calculation or company's valuation.

Alternative tools

The company's profits may be defined differently, depending on the context. You may have heard about net profit, NOPAT, EBIT, EBITDA etc. 

All of those metrics and many more you could calculate using tools available here on Calcopolis. If you are interested in growing your buisses take a look at the other calculators available in the business category.


Authors

Created by Lucas Krysiak on 2022-07-15 13:15:25 | Last review by Mike Kozminsky on 2022-07-18 16:56:27

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