Calculating net profit
The net profit includes all the other costs (and all other income) that may incur or earn that is not directly related to the product. For example the salary of the accountant who prepares your invoices, the advertising budget, travel expenses, etc.
So, how do we calculate this?
We start by setting a list for all the items that we want to include in the net profit calculation and calling the list "other operating expenses" or "opex". To keep it simple we will not go into any tax or exceptional expenses or income. The simplified calculation is:
\(Net\,Profit = Gross\,Profit - Other\,Operating\,Expenses\)
The gross_profit (gross profit) variable has been set for you.
This is a part of the course
“Financial Forecasting in Python”
Exercise instructions
- Add the appropriate variables into the
opexlist:admin,travel,training,marketing,insurance. - Print the resultant list.
- Calculate the net profit as the gross profit minus the total operational expenses.
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Create and print the opex list
opex = [____, ____, ____, ____, ____]
print(____)
# Calculate and print net profit
net_profit = ____ - ____
print("The net profit is {}.".format(____))This exercise is part of the course
Financial Forecasting in Python
Step into the role of CFO and learn how to advise a board of directors on key metrics while building a financial forecast.
In this chapter, we will learn the basics of financial statements, with a specific focus on the income statement, which provides details on our sales, costs, and profits. We will learn how to calculate profitability metrics and finish off what we have learned by building our profit forecast for Tesla!
Exercise 1: Introduction to financial statementsExercise 2: Calculating gross profitExercise 3: Calculating net profitExercise 4: Elements within net profit & gross profitExercise 5: Calculating sales & Cost of Goods Sold (COGS)Exercise 6: Calculating salesExercise 7: Forecasting sales with a discountExercise 8: Calculating COGSExercise 9: Calculating the break-even pointExercise 10: Working with raw forecast datasetsExercise 11: Tesla income statementExercise 12: Forecasting profit for TeslaWhat is DataCamp?
Learn the data skills you need online at your own pace—from non-coding essentials to data science and machine learning.