Looking to calculate your accounting profit quickly and accurately? Our accounting profit calculator is here to help! Simply enter all input in the calculator.
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What is accounting profit?
Accounting profit refers to the difference between total revenue earned and all explicit costs incurred by a business during a specific period. This type of profit calculation takes into account both cash and non-cash transactions, such as depreciation, taxes, interest, and operation expenses.
Accounting Profit Formula
To calculate accounting profit, you subtract explicit costs from total revenue:
Accounting Profit = Total Revenue – Explicit Costs
- AP = TR – TEC
- TEC = OE + I + D + T
- AP = Accounting Profit
- TR = Total Revenue
- TEC = Total explicit costs
- OE = Operation expenses
- I = Interest
- D = Depreciation
- T = Taxes
How to Calculate Accounting Profit?
Example:– Assume that a company earned $100,000 in revenue last year, and its expenses were $70,000. To calculate the company’s accounting profit, follow these steps:
- Total revenue: $100,000
- Total explicit cost: $70,000
- Subtract the explicit from the revenue to determine the accounting profit:
Accounting Profit = Total Revenue – Total Explicit Cost
Accounting Profit = $100,000 – $70,000 = $30,000
Therefore, the company’s accounting profit for the year was $30,000.
How to use an Accounting profit calculator
- First Enter the Total Revenue
- Enter Operation expenses and Interest Cost
- Enter total depreciation and taxes
- Then Click Calculate button